What is an Institutional Investor?
Institutional investors are organizations or entities that pool money or resources to invest in securities and assets. Another popular term for institutional investor is asset owner.
Common types of institutional investors
| Institutional Investor Type | Regulation Level – Investments and Portfolio |
|---|---|
| Bank | Highly-Regulated |
| Insurance Company | Highly-Regulated |
| Employee Benefit Plan | Regulated |
| Business Development Company | Lowly-Regulated |
| Retirement System | Regulated |
| Pension Fund | Regulated |
| Sovereign Wealth Fund | Lowly-Regulated |
| Endowment | Lowly-Regulated |
| Foundation | Lowly-Regulated |
| Family Office | Lowly-Regulated |
| Hedge Fund | Lowly-Regulated |
| Mutual Fund | Regulated |
| Investment Advisor | Lowly-Regulated |
| Superannuation | Regulated |
| Afore | Regulated |
View Ranking of Public Institutional Investors
Financial Intermediaries
Some institutional investors can be financial intermediaries between lenders and borrows.
FINRA defines Institutional Investor as:
(A) person described in Rule 3110(c)(4), regardless of whether that person has an account with an NASD member;
(B) governmental entity or subdivision thereof;
(C) employee benefit plan that meets the requirements of Section 403(b) or Section 457 of the Internal Revenue Code and has at least 100 participants, but does not include any participant of such a plan;
(D) qualified plan, as defined in Section 3(a)(12)(C) of the Act, that has at least 100 participants, but does not include any participant of such a plan;
(E) NASD member or registered associated person of such a member; and
(F) person acting solely on behalf of any such institutional investor.