Which aspect significantly influences the cost of a real portfolio?

The cost of a real portfolio is significantly influenced by trading costs incurred during execution. When buying or selling securities, investors must consider transaction costs, which can include brokerage fees, bid-ask spreads, and market impact costs. These costs can vary based on how liquid the security is and how large the trade is relative to the overall market volume.

High trading costs can materially affect the overall performance of a portfolio, as they reduce the net returns realized from investment strategies. For instance, executing large trades can lead to unfavorable price movements, increasing costs further. Therefore, understanding and minimizing trading costs is vital for ensuring that investment strategies are effective and that net returns are maximized.

While the initial portfolio value, percentage change in market price, and number of shares ordered are important factors in the overall management of a portfolio, they do not directly affect the transactional costs incurred during the execution of trades in the same way that trading costs do. Thus, trading costs play a crucial role in determining the efficient management and overall profitability of a real portfolio.