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Fund Spy

Which Fund Companies Are Really Thinking Long Term?

We take a closer look at fund-company trading.

As hedge funds have grown rapidly in recent years, mutual fund managers have been telling us that short-term trades have become less profitable. However, they say all that trading by hedge funds has created more opportunities for the long term. So, they say investors with long time horizons should do quite well.

This made me curious to see just how far out typical fund managers at the largest mutual fund companies are looking. To do that I looked at the asset-weighted turnover average for domestic-stock funds in our nine Morningstar Style Box categories. Turnover of 100% means holding a stock for one year on average, while turnover of 20% means five years.

To be fair, turnover isn't entirely in a manager's control. Redemptions can drive turnover up, and mergers can take holdings out of a portfolio. Changes in market volatility can impact turnover, too.