What's the difference between institutional and non-institutional investors?

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September 2016
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The difference is that a non-institutional investor is an individual person, and an institutional investor is some type of entity. For example, a pension fund, mutual fund company, banks, insurance companies, and any other large institution.

If you are an individual investor, and I am guessing that you are, I think your question is probably more related to share classes. Individual investors are sometimes told by fee-based advisors that they can purchase "institutional" share classes of mutual funds instead of A, B, or C shares. What they are referring to is the ability to purchase lower cost share classes that do not incorporate sales charges. 

There are actually many types of mutual fund share classes, and I would encourage you to read a well written article by Christine Benz of Morningstar called "Making Sense of Share-Class Alphabet Soup". Here is the link to the article.  http://news.morningstar.com/articlenet/article.aspx?id=346727

I hope that helps with your decisions. Happy investing!


Wyatt A. Moerdyk, AIF®


Managing Member

Chief Compliance Officer

Accredited Investment Fiduciary®

10004 Johns Road

Boerne, TX 78006

Office: 210-591-1170

Email: wyatt@evidenceadvisors.com

Web: www.evidenceadvisors.com

Investment Advisory Services offered through Evidence Advisors, LLC, a registered investment advisor. Investopedia LLC and Evidence Advisors, LLC are not affiliated.

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