A pension fund committee is reviewing the annual turnover rates of three potential equity mandates to assess likely transaction costs. Mandate X has a turnover of 80%, Mandate Y has a turnover of 15%, and Mandate Z has a turnover of 2%. Based on typical portfolio management characteristics, which strategy classification best fits Mandate Z?

Question

Accepted Answer

This is correct. Buy and Hold strategies are characterized by zero or negligible turnover (<5%) because the manager does not trade to rebalance or chase performance.

Discussion