What is an institutional investor?

Institutional investor (II) is a large entity with access to a substantial fund of funds used for investment. Institutional investors invest on behalf of others and are the main force on the market, which represents more than 70% of stores on a given day at most financial markets. A closely related concept is a foreign institutional investor (FII), an entity that invests in a foreign financial market, as in the case of British institutional investors who invest in India. These organizations associate financial contributions from a large number of people and invest on the market on behalf of the people who have contributed to the fund. For example, the pension fund collects and invests them together. Investment elections are dictated by employees of the investment company and these employees use different skills to determine how and when the funds should be invested.

advantage of accessThe essential financial support is that an institutional investor can create a very diverse portfolio that will strengthen its financial situation. Because these investors deal with a large amount of money, they also receive preferential treatment and may be eligible for special rates not provided to members of the general public. Institutional investors can also have a huge impact on the market and solvency of individual companies because they have so much financial strength.

Financial regulations are applied differently to institutional investors than other players on the market. In general, they are subject to less regulation and are not as protected as consumers. Regulatory protection is considered less necessary because institutional investors are to concentrate and manage their investments wisely, although this approach to regulation does not necessarily accept anyone who deals with financial markets.

for people who have no experience on the market can work with an institutional investor to generate betterreturn on investment than to invest independently. Institutional investors protect their customers from market confusion and sometimes can bring very high returns. However, lack of investment control also means that consumers will not be able to shape the direction of their investment, and this could expose them to risks if companies investing on their behalf cannot identify market trends.