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Investment term of the day: churn rate

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Churning is the rate by which traders within the markets execute transactions in order to generate commission. It is sometimes referred to as an attrition rate.

The term derives from the word “churn”, meaning to create aggressive motion. Brokers and traders can only create churn when they have discretionary rights over a fund. The way to avoid this as an investor is to ensure that you have complete control over the funds.

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