Institutional Investor

AAA

DEFINITION of 'Institutional Investor'

A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. Institutional investors face fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.

VIDEO

Loading the player...

BREAKING DOWN 'Institutional Investor'

Watching what the big money is buying can sometimes be a good indicator, as they (supposedly) know what they are doing. Some examples of institutional investors are pension funds and life insurance companies.

RELATED TERMS
  1. Net Institutional Sales - NIS

    A measurement used when screening for securities which are being ...
  2. Qualified Institutional Buyer - ...

    A corporate entity that falls within the "accredited investor" ...
  3. Elephants

    Slang for large institutions that have the funds to make high ...
  4. Investment Banker

    An individual who works in a financial institution that is in ...
  5. Block Trade

    An order or trade submitted for sale or purchase of a large quantity ...
  6. Iceberg Order

    A large single order that has been divided into smaller lots, ...
Related Articles
  1. Economics

    How the Chinese Stock Market Heavily Affects the US

    Learn about the ways in which the Chinese stock market affects the U.S. economy, the dollar, the interest rate and imports and exports.
  2. Investing Basics

    Pitfalls Of Copycat Investing

    While it may sound good in theory to attempt to mimic the investment style and profile of a successful institution, it is often much harder (if not impossible) to do so in practice.
  3. Fundamental Analysis

    Introduction To Institutional Investing

    Investopedia explains: Learn about institutional investing and all of the major players in this field.
  4. Investing Basics

    The Market Participant Playbook

    Find out what effect institutional investors have on the stock market and individual traders.
  5. Fundamental Analysis

    Institutional Investors And Fundamentals: What's The Link?

    Big-money sponsorship might make a company look good, but it's not always a reliable gauge of stock quality.
  6. Investing Basics

    The Roles Of Traders And Investors In The Marketplace

    Discover how these two groups work together to keep the market functioning properly.
  7. Professionals

    Do You Belong In Retail?

    Making a career in retail is one of the most challenging tasks in the investment industry. Find out if it's for you.
  8. Mutual Funds & ETFs

    How To Invest In Private Equity

    Private Equity might be a pricey investment, but returns are on the rise and the payoff could be big.
  9. Economics

    Cautionary Signs For International Investors

    "Going global" is a fashionable investing style, but investors should know the risks.
  10. Mutual Funds & ETFs

    The Pros And Cons Of Institutional Ownership

    These big players can both create and destroy value for shareholders.
RELATED FAQS
  1. What criteria does a property need to meet to be considered an 'investment grade' ...

    A property is considered to be investment, or institutional, grade if it attracts the attention of large institutional buyers, ... Read Full Answer >>
  2. Who can get access to a highly anticipated IPO?

    The frenzy that surrounds a company's highly anticipated initial public offering (IPO) can be enticing to individual investors, ... Read Full Answer >>
  3. A company I recently looked up showed institutional holdings of more than 100%. How ...

    It is obviously not technically possible for any shareholder or category of shareholder to hold more than 100% of a company's ... Read Full Answer >>
  4. What's the difference between institutional and non-institutional investors?

    There are a number of differences between institutional investors and non-institutional investors. If you are considering ... Read Full Answer >>
  5. How does investment banking differ from commercial banking?

    Investment banking and commercial banking are two primary segments of the banking industry. Investment banks facilitate the ... Read Full Answer >>
  6. What is the 12b-1 fee meant to cover?

    A 12b-1 fee in a mutual fund is meant to cover the fees of companies and individuals through which investors of a fund buy ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  2. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  3. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  4. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  5. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  6. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!