# Magnitude of Transaction Cost for Institutional Investors

For my thesis, I'm writing about robust portfolio allocation. I have the idea to include a measure of transaction cost, since ignoring them seems too simplifying for a real-world problem. Comparing a traditional and a robust portfolio, it has been found that the robust portfolio consists of fewer assets and needs less restructuring, so if we assume transaction cost, it is even better than a traditional portfolio.

My question is now, what is the magnitude that I can assume for both private and institutional investor's transaction cost? I'm not trading myself; I heard that a private person's stock trading takes around 1% transaction fee. I assume it is much lower for a large private or commercial investor, but still above 0. The asset classes should involve stocks, funds, indices.

My idea on the measure of the transaction cost $c_i$ for the readjustment of the portfolio $x$ between periods $i$ and $i+1$ would look as follows: \begin{alignat*}{5} c_i \thicksim \sum_{j=1}^n |(x_{i+1})_j-(x_i)_j| \end{alignat*}