Stocks in UK unit trusts and Open-Ended Investment Companies (OEICs) are typically held for just less than two years, according to Lipper.

Data from the financial research organisation shows the average annual portfolio turnover for actively managed equity funds is 56.6%. This indicates how actively each fund is managed, according to Lipper, by measuring the level of buying and selling of the underlying investments. Such activity is also a key driver of trading costs.

Looking at specific sectors, UK-focused funds have tended to hold investments for longer, with a portfolio turnover of 54.7% recorded for the UK all companies sector, 43.6% for UK equity income and 43.6% for funds in the UK smaller companies sector.

Japanese-focused funds had the highest turnover levels, with 84.6%, followed by those investing in North America (81.2%) and Europe ex UK (79.2%).

Ed Moisson, Lipper’s Director of Fiduciary Operations in Europe, said: “While investors should be aware of a fund’s investment objectives, they should not assume that all funds in one sector are managed in the same way. For example, some aggressive funds are traded more frequently, while others just concentrate on a small portfolio of holdings. So turnover can be a crucial part of establishing whether the fund is doing ‘what it says on the label’.”

He continued: “Disclosing portfolio turnover in a meaningful manner can help investors understand how actively their fund is being managed and the potential impact on trading costs.”