Institutional Investor
Candlefocus EditorWhen it comes to investing, institutional investors have more resources and information than individual investors. Professional portfolio managers and skilled traders oftehfore, they can trade on insider information, market price changes, and other knowledge not available to the general public. According to the U.S. Securities and Exchange Commission, institutional investors are in the best position to ensure that their trading practices are not contrary to their fiduciary duty or the interests of the investors they represent.
Furthermore, institutional investors are not subject to the same regulatory oversight as individual investors. The size of the positions and the amount of money involved with institutional investments puts them in a position to make profits or losses that have a measurable impact on the markets. When institutions buy large blocks of shares, supply is reduced and prices may rise as a result. Similarly, when institutions sell, supply increases and prices can plummet.
Apart from their size, the strategies employed by institutional investors differ from those of the average investor. While individual investors may aim to find undervalued stocks that can yield short-term gains, institutional investors often take a much longer-term approach. They may focus on stocks, bonds, derivatives, commodities, and other assets that can be sold for a profit in a year or two. Additionally, they can leverage hedging and other sophisticated strategies that aren’t available to retail investors.
It’s also worth noting that institutional investors play a major role in company financing. They often invest in initial public offerings (IPOs) and help give new companies access to capital. In addition, institutional investors are a major source of income for banks and other financial services firms.
Institutional investors have significant buying power and the resources to make informed decisions. The large positions they trade and the strategies they employ can have wide-reaching impacts on markets and economies. As such, they are an essential part of global finance and investing.