Institutional Investor

Institutional Investor

An institutional investor is a regulated financial institution that pools the investments of its clients and invests in large size. Insurance companies, pension funds, asset managers/mutual funds, hedge funds, private equity firms, family offices, sovereign wealth funds, endowment funds, and the investment management arms of banks are types of institutional investor. Unlike retail investors, institutional investors are supposed to be more sophisticated to protect themselves.However they are subject to regulation requiring them to exercise due care when investing on behalf of their end clients. Institutional investors create a multiplicity of funds across the spectrum of financial instruments, including equities, bonds, money markets, commodities, property as well as so-called alternative asset classes such as infrastructure. Funds can be single asset or cross asset class, with a series of risk profiles to suit the risk tolerances of clients. Firms invest their assets in accordance with formal asset allocation strategies.

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