It tells you the extent to which your fund manager churned the portfolio in the past one year. It is the percentage of a fund's holdings that have changed in a given year. It is calculated by taking the lower of the sales or purchase (in terms of value) and dividing it by the total net assets of the scheme. Higher turnover ratio would reflect higher transaction costs. Aggressively managed funds generally have higher portfolio turnover rates than conservative funds. A lower the turnover ratio shows fund manager’s conviction and would indicate a buy-and-hold strategy.