# How large are transaction costs in practice?

I am wondering, what kind of transaction costs practitioners (institutional investors) are faced to. Portfolio optimization literature often evaluates portfolio performance after adjusting for a value taking the form $T(\Delta) = 50/10.000 \sum_{i=1}^N |\Delta_i|$ where $\Delta_i$ is rebalancing of wealth in asset $i$. I do not expect this number to reflect what is really going on in the markets, however, due to the lack of better approximations the functional form above is used frequently in academia.

• Does the proportionality constant of $50$ bp has some reliability in the industry?
• Do investors in reality face a fixed fee as soon as they touch a single asset? In other words, given I rebalance a small amount $\varepsilon>0$, am I going to by a fee anyway just because I called my broker?
• The form above also assumes that transaction costs keep smooth even I rebalance a lot of my wealth. Does this approximation hold in reality, for example by performing some form of smart order routing?

I am happy for every reply or reference coming up with new ideas on how one could take into consideration transaction costs!