Analyzing Transaction Costs in Portfolio Rebalancing

Jane Doe is a portfolio manager managing a diversified equity fund. She has identified the need to rebalance the portfolio due to a significant appreciation in one of the holdings, TechCorp, which now occupies 25% of the portfolio's total value, exceeding her target allocation of 15%. In her attempt to rebalance, she considers the associated transaction costs that can arise from selling shares of TechCorp and reallocating into underweight sectors like utilities and healthcare.

In your essay, discuss the various types of transaction costs Jane should consider as she rebalance her portfolio. Include both explicit costs, such as commissions and spreads, and implicit costs, like market impact and opportunity costs. Additionally, analyze how these costs might influence her decision-making process regarding the timing and execution of trades. Finally, suggest strategies Jane could employ to minimize transaction costs during this rebalancing activity.