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Formula sheet/NISM Series V-A: Mutual Fund Distributors/Mutual Fund Scheme Performance
[ MUTUAL FUND SCHEME PERFORMANCE ]

Portfolio Turnover Ratio (PTR)

Portfolio Turnover Ratio=[min(Total Purchases,Total Sales)during Period]/Average Scheme Net Assets(AUM)\text{Portfolio Turnover Ratio} = [ min(\text{Total Purchases}, \text{Total Sales}) \text{during Period} ] / \text{Average Scheme Net Assets} (AUM)
Average Holding Period=12Months/Portfolio Turnover Ratio\text{Average Holding Period} = 12 Months / \text{Portfolio Turnover Ratio}
Variables

High PTR indicates aggressive short-term trading, incurring higher brokerage and transaction costs; low PTR indicates buy-and-hold investing.

Worked examples
Information Ratio & Tracking Error Evaluation

A large-cap equity fund generates an annualized return of 16.2% against its Nifty 50 TRI benchmark return of 14.0%. The standard deviation of the daily excess returns (Tracking Error) over the past year is 2.50%. Calculate the Information Ratio.

Portfolio Turnover Ratio and Average Holding Period

A flexi-cap mutual fund scheme with average daily net assets (AUM) of Rs 5,000 Crore records total stock purchases of Rs 3,200 Crore and total stock sales of Rs 2,500 Crore during the fiscal year. Calculate the Portfolio Turnover Ratio (PTR) and the average holding period of securities.