Institutional vs.

Retail Investors: An Overview

https://www.investopedia.com/ask/answers/06/institutionalinvestor.asp

Investing attracts different kinds of investors for different reasons. The two
major types of investors are the institutional investor and the retail investor.
An institutional investor is a company or organization with employees who
invest on behalf of others (typically, other companies and organizations). The
manner in which an institutional investor allocates capital that’s to be invested
depends on the goals of the companies or organizations it represents. Some
widely known types of institutional investors include pension funds, banks,
mutual funds, hedge funds, endowments, and insurance companies.

On the other hand, retail investors are individuals who invest their own
money, typically on their own behalf. Broadly speaking, the main differences
between the institutional investor and the retail investor are the rate at which
each trades, the volume of money and investments involved in their trades,
the costs each pays to invest, their investment knowledge and experience,
and the access each has to important investment research.

 An institutional investor is a company or organization that trades

securities in large enough quantities to qualify for preferential treatment
from brokerages and lower fees.
 A retail investor is an individual or non-professional investor who buys
and sells securities through brokerage firms or retirement accounts like
401(k)s.
 Institutional investors do not use their own money, but rather, they
invest the money of others on their behalf.
 Retail investors are investing for themselves, often in brokerage or
retirement accounts.
 The differences between institutional and retail investors relate to costs,
investment opportunities, and access to investment insight and
research.

Key Differences
There are quite a few differences between the institutional investor and the
retail investor, some of which have been pointed out previously. Below, you'll
find a summary of key differences that underscores the essential aspects of
size and influence belonging to each type of investor.
Institutional Investors vs. Retail Investors: What's the Difference?

   Institutional Investor Retail Investor

Enormous amounts of pooled money that Limited to the amount an individual can
Funds belongs to the companies and allocate for trading and investing
organizations for which it invests

Typically smaller trade sizes and less

Large positions and frequent transactions
frequent trading has little adverse effect on
can result in sudden price movements that
Potential market movement 
are unexpected by other investors and can
Trading Impact
move an entire market in unexpected
directions

Less of an issue due to investment and May occur due to lack of investment
market experience and expertise, education and readily available market
Emotional
education, and instant access to feedback feedback; can have a positive or negative
Trading
and advice impact on markets if substantial trading
occurs by enough individuals

Transaction
Type/Size Block trades of 10,000 shares or more Round lots of 100 shares or more
Example

Protective Subject to less protective regulation due Subject to more protective regulation due to
Regulations to investment expertise and knowledge perceived experience, education

Not likely to limit buying to any particular More likely to invest in stocks of companies
Limits size of company or share price level with lower share prices to enable more
purchases for diversification

Access to extensive market research and Access to a wealth of information, has less
Information
up-to-the-minute market insight and access to the information reserved for
Advantage
specialist feedback institutional investors

What Percentage of Investors Are Institutional?

The entire number of actual, active investors, both institutional and retail, is
hard to know. However, it is known that institutional investors account for
more than 85% of the volume of trades on the New York Stock Exchange.

What Are the Different Types of Institutional Investors?

Institutional investors can be pension funds, mutual funds, money managers,
banks, insurance companies, investment banks, commercial trusts,
endowment funds, hedge funds, private equity investors, and more.

Asset allocation

Source: https://www.mercer.com/content/dam/mercer/attachments/private/gl-2022-asset-
allocation-insights-report.pdf

Over the recent one-year period, asset allocation did not move significantly, although we noted a
decline in fixed income to just under half of aggregated assets (49%) and a corresponding
modest increase in equity, while alternatives and cash remained steady. The declining proportion
of fixed income in the aggregate assets of plans in Brazil and Chile and the increasing proportion
of equities within the plans in Japan were partial drivers of this shift.

Middle east region was more heavily positioned to equities compared to the overall survey
positioning, with 55% of total assets in equities relative to 39% for the survey average. South
Africa had a particularly high exposure to equities of 61%, with 31% of total assets in fixed
income. The DEWS Plan represents members’ investment selections across
its menu of diversified fund offerings and ended the period with 32% of total assets in equities
and 12% in alternatives (real estate). In Turkey, concerns about economic and market volatility
have led to an allocation of over 51% in fixed income and cash combined, as well as a large
allocation to “other” (mainly representing precious metal funds and public-leasing certificates,
which are securities issued by asset-leasing companies with returns tied to revenue received from
the underlying asset).
In Europe: (DB= defined benefits)