Are fund managers trading too much? That is what Ian McDonald implies in his latest Wall Street Journal piece (see Turn Turn Turn). He points out that even as price volatility on the stock market has come down, many fund managers continue to actively trade their portfolios. Seemingly, this effort would be for naught if share prices are relatively stable.

McDonald points out that neither the S&P 500 or DJIA have moved by more than 2 percent in a trading day so far in 2004. That is a sharp decline from the 30 days the pair of indices moved that much or more in 2003.

He admits that the median turnover figures at funds is lower, but notes that it still rests above 100 percent, according to both Morningstar Inc. and Lipper Inc. That figure implies the typical U.S. equity fund turns over its entire portfolio annually.

Interestingly, he notes that the majority of assets are in lower turnover funds. That may mean that fund managers are missing the message ("Don't just do something, stand there"), according to McDonald.

Or, perhaps, it means that fund managers without track records (and assets) are trying anything to hit a winner ... and then trying it again.  

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