# How does Turnover work

Turnover measures how often securities in a portfolio are traded over a certain period. It indicates how actively a portfolio is managed.

### Why is it useful?

Turnover provides insight into the trading activity of your portfolio. A high turnover can indicate an active trading strategy. A low turnover indicates that less trading is done within a portfolio, which usually means a more passive strategy.

### How is Turnover calculated?

Turnover is calculated by taking the minimum value of the “total purchases or total sales” and dividing it by the “average portfolio value”. If the period is longer than a year, we look at the annual turnover average.

Turnover = MIN(Total sales; Total purchases) / (Average portfolio value) x 100

Suppose your portfolio has an average value of €10,000 during the year. In that same year, you sold €4,500 worth of securities and bought €3,500 worth of securities. Since €3,500 is the minimum value in this example, this means that your portfolio has a Turnover of 35% (3,500 / 10,000 x 100%).