Institutional Investor

An institutional investor refers to a legal entity (i.e., a company or organisation) that invests funds for its members or customers to earn profit. Some common examples of institutional investment companies include banks, mutual funds, hedge funds and insurance companies. 

These entities typically buy, sell, and manage investments (i.e., bonds, stocks, other investment securities, etc.) as their primary role. This type of investor is known to be more well-versed than an average retail investor and is sometimes less confined by regulations. 

Retail investors (or non-institutional investors) usually buy and sell stocks in round lots of about 100 shares or more outstanding. In comparison, institutional investors buy and sell in block trades of about 10,000 or more shares, which is a stark difference. 

This is why institutional investors carry a lot of weight in the price dynamics of the market through the various investment instruments available and tend to have a positive impact in the grand scheme of things. However, institutional investors must ensure they operate within security laws, such as avoiding buying out a high company ownership percentage. 

As always, do your due diligence before trying out a new venture and consult with subject matter experts on the best step forward.