It's no secret that traditional mutual fund managers have a tough time sticking with a stock for any length of time. They dart in and out of different holdings like an aggressive driver zipping from one lane to another on a crowded interstate.

Does that get these funds to their destination any faster? Usually not, judging by their mediocre long-term performance. Worse still, all that fast-paced trading can be more costly than a handful of speeding tickets. Let me explain.

Knowledgeable investors should always know to check a portfolio's turnover (which is calculated by taking the lesser of asset purchases or sales in a given year and then dividing by the fund's total net assets).

Decades ago, the average mutual fund portfolio turnover was a modest 25%. So for a fund invested in 100 stocks, one-quarter were sold and replaced in a 12 month period. From another perspective, the average stock remained in the portfolio for about four years.

Today that rate stands at an elevated 97%, meaning just 3% of the stocks in a portfolio on January 1st are still around by the end of the year. Many fund managers have even itchier trigger fingers. The Alliance Global Thematic Growth (ATEBX), for example, has a portfolio turnover of 201%.

There are at least three reasons why you may want to steer clear of funds with sky-high portfolio turnover.

First, every single time a stock is sold at a profit, it triggers an unwelcome capital gains tax bill. So funds that constantly buy and sell tend to score low on a tax-efficiency basis. Second, mutual funds have to pay for their buy and sell orders just like you and me. More trades mean more commissions, essentially yanking money right out of your pocket.

Finally, consider that it's nearly impossible to buy (or unload) huge blocks involving thousands of shares without affecting the price of those shares. If a manager wants to purchase $10 million worth of Netflix (Nasdaq: NFLX), the fund's demand will drive up the price. Likewise, trying to liquidate 10 million shares could potentially push the price lower and bite into the proceeds.

Experts like Vanguard's John Bogle estimate that the impact of all these frictional trading expenses cost shareholders well over 100 basis points a year, not counting taxes. Don't assume these hidden costs are included in a fund's expense ratio. They are unreported and invisible -- slowly chipping away at the net asset value of the fund over time.

The erosive impact can be staggering. A $25,000 investment earning +9% annually can grow to $59,184 during a 10-year period. Drop that net return down to +8%, and the same investment would only be worth $53,973 -- excessive trading could wipe out $5,200.

In some cases, a nimble manager can overcome all these handicaps and still produce outsized returns. But most gunslingers deliver poor performance and saddle shareholders with extra expenses and taxes. Portfolio turnover can be a valuable warning sign that something is amiss.

Fortunately, ETFs track fixed indexes whose components rarely change, so they typically have low portfolio turnover. The average ETF sports a minimal turnover below 11.1%. This is just another reason why these innovative vehicles are far superior to mutual funds.