Institutional investors are large corporations with considerable cash to invest. They move large amounts of shares and have a great deal of influence over the market. They are also subject to fewer protective regulations than non-institutional investors because they are thought to be more knowledgeable about the stock market and investment risks.
Many people benefit from institutional investors without realizing it. Institutional investors aren't actually investing money they have raised themselves. They typically invest for other people. For example, anyone with a pension plan is utilizing an institutional investors expertise.
Types of institutional investors include:
- Insurance companies.
- Finance companies.
- Mutual funds.
- Hedge funds.
- Investment advisors.
- Union trusts.
- Pension funds.
- Labour union funds.
- Endowment funds.
- Commercial trusts.
Institutional investors typically play a huge role in trading activity including securities trading. How can this translate to improving your investments? Watching the investments that institutional investors make can be a good indicator of a company's health and financial future. They hire analysts and researchers to learn more about companies they intend to invest in. This gives them the ability to make a more educated decision than a non-institutional investor would be able to make. So, the next time you're trying to determine what to invest your money in, take a look at what the institutional investors are doing.
This post was originally written for Winflow Financial Group for their Investor's Blog. You can also follow us on Twitter.