Are Low Turnover Investment Strategies Overrated?
May 19, 2014
By Michael Kitces, MSFS, MTAX, CFP, CLU, ChFC
Low turnover is supposed to extend the life of an investment, deferring any tax on growth until another day. But even one transaction every 10 years can forfeit 50% of the wealth benefit of tax deferral. Add in dividends and even more of the tax benefits evaporate. There is remarkably little value to reducing portfolio turnover, unless you can reduce it to zero.