The figure of the institutional investor refers to the entity that invests large amounts of money in securities or funds; that is, the type of organization that invests its own capital or that of others in goods, rights and other assets both financial and non-financial. Such investments are made possible by contributions from retail investors.
The volume of capital handled by institutional investors is so large that they exceed the capacity of action of the individual investor and can influence the decision-making of companies. companies and companies in which they invest.
Examples of institutional investors
Banks themselves, investment companies and pension fund managers are just some of the main examples of institutional investors that we can find. Let's get to know each of them in more detail:
- Insurance companies: these are companies specialized in insurance that accumulate their wealth thanks to the contributions of individuals who are exposed to possible unfavorable economic events (an accident, a theft, etc.) In this way, the accumulated money will go to the people who finally suffer some kind of unfavorable economic event.
- Investment companies: products that bring together the contributions of different people (both physical and legal) in order to invest them jointly as long as the investor's performance is established based on collective results.
- Investment funds or mutual fund: collective investment institutions that pool funds from different investors to invest in different financial instruments.
- Pension funds: long-term savings products that do not have legal personality and that have been designed to cover various contingencies, such as retirement. The beneficiaries of these products, which are always private but are never substitutes for public pensions, are the natural persons who are entitled to receive these pension funds (whether they have participated or not).