For Australian investors, 2026 is shaping up to be a year of both opportunity and complexity. With global markets swinging on economic news and local regulations evolving, understanding the mechanics behind your investment returns is more important than ever. One factor that often flies under the radar—but can make a real dent in your portfolio’s long-term growth—is portfolio turnover.
What Is Portfolio Turnover?
Portfolio turnover is the rate at which assets within an investment portfolio are bought and sold over a given period—usually a year. A turnover rate of 50% means half the holdings have been replaced in 12 months. For managed funds and ETFs, this figure is published in annual reports and fact sheets. But why does it matter? Because turnover can have a direct impact on your investment costs, tax bill, and ultimately your returns.
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High turnover funds frequently buy and sell assets, seeking to capture short-term gains or respond to market trends.
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Low turnover funds tend to hold assets for longer, aligning with a buy-and-hold approach.
Why Portfolio Turnover Matters in 2026
This year, several factors make portfolio turnover more relevant for Australians:
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Capital gains tax (CGT) changes: The ATO has tightened reporting requirements for CGT events in 2026, making record-keeping more important and highlighting the impact of frequent trading on your tax bill.
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Rising brokerage and platform fees: While some platforms have dropped headline trading costs, hidden admin fees linked to turnover can quietly erode returns, especially in actively managed funds.
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Market volatility: Ongoing global uncertainty, from interest rate fluctuations to geopolitical risks, has led some fund managers to increase trading in pursuit of outperformance. This can drive up turnover rates across many investment products.
For example, an Australian equity fund with a 120% turnover rate in 2024 ended up generating double the realised capital gains (and thus tax liabilities) for its investors compared to a similar fund with just 20% turnover. This difference directly affected investors’ after-tax returns, even though both funds reported similar headline performance.
How to Assess and Manage Portfolio Turnover
Most investors don’t pay close attention to turnover—until the costs start to bite. Here’s how you can stay ahead in 2026:
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Check the facts: Before investing in a managed fund or ETF, look up the published turnover rate in the PDS or annual report. Funds with turnover above 50% are considered relatively active.
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Balance strategy and tax: High turnover isn’t always bad—some strategies (like momentum investing) require frequent trading. But be aware that every sale can trigger a taxable event, potentially pushing you into a higher tax bracket or reducing CGT discounts on assets held less than 12 months.
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Look for tax-efficient funds: Some Australian managers now promote “tax-aware” investment processes, seeking to minimise unnecessary turnover. These can be especially valuable in non-super investment accounts where CGT is payable.
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DIY investors: Track your own turnover: If you manage your own portfolio, calculate your annual turnover by dividing the total value of assets bought or sold by your average portfolio size. If you’re surprised by the number, consider whether your trades are truly adding value.
Portfolio Turnover and the Future of Investing in Australia
With the rise of low-cost index funds and ETFs, more Australians are embracing a passive, low-turnover approach. However, 2026’s market volatility is tempting some to chase short-term gains through more frequent trading. While this can sometimes boost pre-tax returns, the extra costs—hidden and explicit—can quickly add up.
Here are a few real-world trends shaping the turnover conversation this year:
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Super funds: Many large Australian super funds are publishing more detailed turnover statistics, responding to member demand for transparency on costs and tax efficiency.
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ESG investing: With sustainability now a core focus, some ESG funds are adjusting portfolios more frequently to align with new ratings or regulations, nudging turnover higher.
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Digital platforms: Robo-advisers and online brokers are offering turnover analytics, helping DIY investors spot when “active tinkering” might be hurting rather than helping their results.
Ultimately, the right turnover level depends on your investment goals, tax situation, and appetite for risk. But in 2026, there’s no excuse for flying blind. With better data and more transparent reporting, every Aussie can make smarter choices about the hidden costs of their investments.