RT Journal Article
SR Electronic
T1 Hidden Cost of Trading and Portfolio Performance: <em>A Short Note on Implementation Shortfall</em>
JF The Journal of Investing
FD Institutional Investor Journals
SP 69
OP 80
DO 10.3905/joi.2018.1.072
VO 27
IS 4
A1 Rafiqul Bhuyan
A1 Mohammad Sogir Hossain Khandoker
YR 2018
UL https://pm-research.com/content/27/4/69.abstract
AB Chasing performance is a constant battle among fund managers and other investors. Stock picking ability is not the only means to perform that chase well. Trading wisely by managing transaction costs, which comprise all visible, invisible, and implied or hidden costs, is also a significant factor. In his seminal paper, Perold (1988) was the first to point out that fixed charges are not the only costs of trading. Instead, they are rather a small portion of the total transaction costs that include other costs known as “implementation shortfall.” In this short article, the authors extend the existing literature by highlighting various aspects of the execution and opportunity costs that can give traders a much clearer understanding of implementation shortfall and help them to use this guidance in trading wisely.TOPICS: Performance measurement, portfolio management/multi-asset allocation, security analysis and valuation