What will determine the size of transaction costs in an investment company?

Question

Quizplus · Accepted Answer

The size of transaction costs in an investment company is mainly determined by the amount of turnover in their portfolio. Turnover refers to the frequency with which assets are bought and sold. The higher the turnover, the higher the transaction costs. This is because every time a trade is made, there are costs such as brokerage fees, bid-ask spread, and taxes that add up over time. Commission charged may also play a role, but it is not the only determinant. Past performance and transaction costs have no direct relation.

What Will Determine the Size of Transaction Costs in an Investment