High-Turnover vs. Low-Turnover Mutual Funds: A Comparative Analysis of Value Addition Over Different Horizons

This qualitative literature review examines the comparative analysis of value addition between high-turnover and low-turnover mutual funds across different investment horizons. Through an extensive review of recent studies, the review identifies key performance metrics, market dynamics, and investor preferences associated with each strategy. High-turnover funds demonstrate superior short-term performance metrics, driven by active management strategies aimed at capitalizing on market inefficiencies and rapid information incorporation. In contrast, low-turnover funds offer stable long-term returns with lower transaction costs and reduced volatility over extended horizons. The review also explores the implications of turnover rates on market efficiency, investor welfare, and regulatory considerations. Limitations include variations in data availability, methodological approaches, and the dynamic nature of financial markets. Future research directions emphasize standardized methodologies, global market analysis, and the long-term impact of regulatory reforms on fund management practices and investor outcomes.