The mutual fund asset turnover ratio measures the percentage of the portfolio that the mutual fund replaces on an annual basis. For example, a turnover ratio of 55 percent means that each year, the mutual fund replaces just over half of the stocks in its portfolio. A high mutual fund asset turnover ratio means that the fund manager actively trades the stock. This is not always a good thing because more trades mean more commissions and fees.

1. Add the cost of all the stocks purchased by the mutual fund during the year to find the total purchases. Add the proceeds from all the stocks sold during the year to find the total sales.

2. Add the value of the mutual fund each month and divide the result by 12 to find the average asset value of the mutual fund.

3. Divide the smaller of either the stocks purchased or stocks sold for the year by the average asset value of the mutual fund. For example, if the mutual fund purchased $1.8 million in stocks during the year, sold $1.5 million of stocks during the year and has an average asset value of $7 million, divide $1.8 million by $7 million to get 0.2571.

4. Multiply the result by 100 to find the turnover ratio for the mutual fund. In this example, multiply 0.2571 by 100 to find the turnover ratio equals 25.71 percent.

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