Lowest rebalancing cost - S&P index

Which construction method for the S&P index passive strategy has lowest rebalancing cost?

A. Full replication

B. Optimization

C. Stratified sampling



And the solution is? From what I read in the CFAI text and schweser, Optimization can better match the index (thus lower tracking risk) but needs more rebalancing?

It’s obviously “A”

S&P 500 is made up of Large Cap, highly liquid stocks. Full replication is (usually) buy and forget, barring dividend re-investment; hence, the strategy will exhibit the lowest rebalancing cost

Correct, A. ^Hard Dollars, well explained.

For a portfolio of any size? What if I just have 100k to invest, still use full replication? Buying 500 stocks seems a bit much for that size.

^ You are right. My question should add 100 million USD portfolio:)