What entity is considered an institutional investor?
According to investment dictionaries an encyclopedias, any organization that trades large volumes of securities is considered to be an institutional investor. The current regulations do not define an institutional investor, they however define Institutional Manager and Accredited Investor, terms that may be treated as synonyms. Institutional Investment Manager According to the regulations dealing with SEC 13F filings, an institutional investment manager is an entity that either invests in, or buys and sells, securities for its own account; or an entity that exercises investment discretion over accounts owned by any other natural person or entity. A natural person who exercises investment discretion over his or her own account is not an institutional investment manager. Entities deemed to be investment managers include:
- registered investment advisors (RIAs) exercising discretion over client accounts,
- broker/dealers and insurance companies that trade in their own accounts,
- corporations and pension funds that manage their own investment portfolios,
- investment advisors to hedge funds and mutual funds
- other private (not registered) investment advisors with discretion power,
- trustees of trusts that invests in, or buys and sells, securities
- a bank, insurance company, registered investment company (generally speaking, a mutual fund), business development company, or small business investment company;
- an employee benefit plan, within the meaning of the ERISA Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;
- a charitable organization, corporation, or partnership with assets exceeding $5 million;
- a director, executive officer, or general partner of the company selling the securities;
- a business in which all the equity owners are accredited investors;
- a natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase;
- a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
- a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.
7 people found this useful
Institutional investors are organisations which pool large sums of money and invest those sums in companies. They include banks , insurance companies , retirement or pensi…on funds , hedge funds and mutual funds , angel investor groups, venture capital groups, private investment clubs.. If looking for funds to invest in, I'd recommend checking out the ratings at http://www.morningstar.com . if needing an investment, check out the listings of venture capital and angel capital investor groups at http://www.breadstreetinc.com
Individual investors may have to pay more for stocks becauseinstitutional investors are bidding the prices up. This can make ithard for individual investors to have a sizable …portfolio.
An individual investor is a person, like you or me. In this example, assume we are each a rowboat in the ocean. An institutional investor is a business. It may be a mutual fun…d company. It may be a company that manages the retirement fund for teachers in your state. In this example, assume the institutional investor is an ocean liner. Now think of the rowboat and the ocean liner. Which makes the bigger wave? Which affects the other? Which can withstand a storm better?
Institutional investors have more money and access to company managements. So they can buy early and sell early. Individual investors usually buy only after the institutions h…ave jacked up the price. Then they are left holding high priced stocks when the institutions move out.
Institutional investors are organizations which pool large sums of money and invest those sums in companies. They include banks, insurance companies, retirement or pension fun…ds, hedge funds and mutual funds. Their role in the economy is to act as highly specialized investors on behalf of others. For instance, an ordinary person will have a pension from his employer. The employer gives that person's pension contributions to a fund. The fund will buy shares in a company, or some other financial product. Funds are useful because they will hold a broad portfolio of investments in many companies. This spreads risk, so if one company fails, it will be only a small part of the whole fund's investment. Institutional investors will have a lot of influence in the management of corporations because they will be entitled to exercise the voting rights in a company. They can engage in active role in corporate governance. Furthermore, because institutional investors have the freedom to buy and sell shares, they can play a large part in which companies stay solvent, and which go under. Influencing the conduct of listed companies, and providing them with capital are all part of the job of investment management.
Institutional investors often invest in companies through equity or debt investments.
Individual Investor is a person who directly invest in companies shares. whether Institutional investor generally invest for other people.like pension funds,Investment compani…es,Life Insurance companies so forth all of whom manage large portfolios of securities.
These companies specialize in real estate ownership and operation for their parent investment company. They typically invest in many properties in various regions, often worth… millions of dollars.
Is the trend of concentration of ownership of shares in the hands of institutional investors harmful for corporate entities?
It can make them less creative and less moral, because both conscience and originality are born of human minds, and it pushes the human minds of the ultimate owners further fr…om positions of real control. But the effects have been small and hard to notice so far.
According to the Institutional Investor official website, being an institutional investor allows you to be a leading business that publishes main news media.
In Real Estate
Institutional investors gather large sums of money to invest in real estate property, security and investment assets. Typical investors are: banks, pension funds, hedge funds,… mutual funds and insurance companies.
Institutional investors tend to be more proficient in their jobs because they have moved up the professional ladder and worked with many larger contracts.
Euromoney Institutional Investor was created in 1969.