Who are institutional investors?

Institutional investors are typically defined as large organizations that invest substantial amounts of capital in various financial securities, such as stocks, bonds, and real estate. These investors include entities like pension funds, insurance companies, mutual funds, endowments, and sovereign wealth funds. Their significant financial clout allows them to influence market trends and make substantial investments across diverse asset classes.

This classification is important because institutional investors have different investment strategies, risk tolerances, and time horizons compared to individual investors. They often have dedicated teams of professionals managing investments and can access investment opportunities that may not be available to individual investors. As a result, they play a critical role in the financial markets, contributing to liquidity and overall market stability.

The other options involve different types of investors or organizations that do not meet the definition of institutional investors. Individual investors manage smaller amounts of capital and typically invest for personal reasons, while government bodies may have specific focuses on infrastructure rather than categorizing themselves as institutional investors. Similarly, small businesses raising capital from the public do not possess the same scale or investment strategy as institutional investors.