Difference between revisions of "Institutional investors"

From MarketsWiki
Jump to: navigation, search
Line 1: Line 1:
Large financial institutions investing in markets are often called institutional investors and are distinguished from smaller or [[retail investors]] because they transact large values of securities at a time and so generally face fewer regulatory restrictions. They include asset managers, private and public [[pension funds]], insurance companies and [[charitable foundations]] among others.  
+
Large financial institutions investing in markets are often called institutional investors and are distinguished from smaller or [[retail]] investors because they transact large values of [[securities]] at a time and so generally face fewer regulatory restrictions. They include [[asset managers]], private and public [[pension funds]], insurance companies and [[charitable foundations]] among others.  
 
<div style="float:left; margin-right:1em;">{{Eurex Ad 1}}</div>
 
<div style="float:left; margin-right:1em;">{{Eurex Ad 1}}</div>
  
 
== Brief background ==
 
== Brief background ==
 
 
 
The better-known insititutional investors are the big banks, insurers and the so-called [[bulge bracket]] of wealthy Wall Street brokers investment managers. But in recent years so-called 'activist' institutions like public pension funds [[CALPERS]] and [[TIAA-CREF]] have become more influential in corporate decision-making as their influence has grown.<ref>{{cite web|url=http://www.corp-research.org/archives/jul00.htm|name=Institutional Investors: Why They're Important and How to Find Information About their Holdings|org=Corporate Research E-Letter No. 2|date=May 2, 2008}}</ref>  
 
The better-known insititutional investors are the big banks, insurers and the so-called [[bulge bracket]] of wealthy Wall Street brokers investment managers. But in recent years so-called 'activist' institutions like public pension funds [[CALPERS]] and [[TIAA-CREF]] have become more influential in corporate decision-making as their influence has grown.<ref>{{cite web|url=http://www.corp-research.org/archives/jul00.htm|name=Institutional Investors: Why They're Important and How to Find Information About their Holdings|org=Corporate Research E-Letter No. 2|date=May 2, 2008}}</ref>  
  
Institutional investors in U.S. financial markets have rapidly increased their asset holdings over recent years, holding a combined $24.1 trillion in 2005<ref>{{cite web|url=http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=3046|name=U.S. Institutional Investors Continue to Boost Ownership of U.S. Corporations|org=Conference Board|date=May 2, 2008}}</ref> compared to $17.3 trillion in 2002 and just $10 trillion in 2000. And over the same period institutions increased their holdings of U.S. equities from 51.4% of the total in 2000 to 61.2% in 2005.
+
Institutional investors in U.S. financial markets have rapidly increased their asset holdings over recent years, holding a combined $24.1 trillion in 2005<ref>{{cite web|url=http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=3046|name=U.S. Institutional Investors Continue to Boost Ownership of U.S. Corporations|org=Conference Board|date=May 2, 2008}}</ref> compared to $17.3 trillion in 2002 and just $10 trillion in 2000. And over the same period institutions increased their holdings of U.S. equities from 51.4 percent of the total in 2000 to 61.2 percent in 2005.
 
+
  
 
== Recent developments ==
 
== Recent developments ==
 
+
Institutional demand for [[fixed-income securities]] helped fuel growth for [[securitized debt instruments]], but institutions took hit in 2007 when the market for [[subprime mortgage-backed structured debt]] collapsed. Adding insult to injury, U.S. [[Federal Reserve]] Bank recently placed part of the blame for that collapse at the feet of instutitonal investors for underestimating the market's risks.<ref>{{cite web|url=http://www.pionline.com/apps/pbcs.dll/article?AID=/20080417/DAILY/877487684|name=Fed’s Kohn: Institutional investors share blame|org=Pensions & Investments|date=May2, 2008}}</ref>
 
+
Institutional demand for fixed-income securities helped fuel growth for securitized debt instruments, but institutions took hit in 2007 when the market for subprime mortgage-backed structured debt collapsed. Adding insult to injury, [[U.S. Federal Reserve Bank]] recently laid part of the blame for that collapse at the feet of instutitonal investors for underestimating the market's risks.<ref>{{cite web|url=http://www.pionline.com/apps/pbcs.dll/article?AID=/20080417/DAILY/877487684|name=Fed’s Kohn: Institutional investors share blame|org=Pensions & Investments|date=May2, 2008}}</ref>
+
  
 
Fed. Vice Chairman [[Donald Kohn]] in April 2008 said insitutions had "failed" to do better due diligence on the subprime risks they were taking on and instead relied solely on "inadequate" analyses by credit-rating agencies like [[Standard & Poor's Corp.]] and [[Moody's]].  
 
Fed. Vice Chairman [[Donald Kohn]] in April 2008 said insitutions had "failed" to do better due diligence on the subprime risks they were taking on and instead relied solely on "inadequate" analyses by credit-rating agencies like [[Standard & Poor's Corp.]] and [[Moody's]].  
 
 
  
 
== References ==
 
== References ==
 
<references />
 
<references />

Revision as of 19:37, 2 May 2008

Large financial institutions investing in markets are often called institutional investors and are distinguished from smaller or retail investors because they transact large values of securities at a time and so generally face fewer regulatory restrictions. They include asset managers, private and public pension funds, insurance companies and charitable foundations among others.

Template:Eurex Ad 1

Brief background

The better-known insititutional investors are the big banks, insurers and the so-called bulge bracket of wealthy Wall Street brokers investment managers. But in recent years so-called 'activist' institutions like public pension funds CALPERS and TIAA-CREF have become more influential in corporate decision-making as their influence has grown.[1]

Institutional investors in U.S. financial markets have rapidly increased their asset holdings over recent years, holding a combined $24.1 trillion in 2005[2] compared to $17.3 trillion in 2002 and just $10 trillion in 2000. And over the same period institutions increased their holdings of U.S. equities from 51.4 percent of the total in 2000 to 61.2 percent in 2005.

Recent developments

Institutional demand for fixed-income securities helped fuel growth for securitized debt instruments, but institutions took hit in 2007 when the market for subprime mortgage-backed structured debt collapsed. Adding insult to injury, U.S. Federal Reserve Bank recently placed part of the blame for that collapse at the feet of instutitonal investors for underestimating the market's risks.[3]

Fed. Vice Chairman Donald Kohn in April 2008 said insitutions had "failed" to do better due diligence on the subprime risks they were taking on and instead relied solely on "inadequate" analyses by credit-rating agencies like Standard & Poor's Corp. and Moody's.

References

  1. Institutional Investors: Why They're Important and How to Find Information About their Holdings. Corporate Research E-Letter No. 2.
  2. U.S. Institutional Investors Continue to Boost Ownership of U.S. Corporations. Conference Board.
  3. Fed’s Kohn: Institutional investors share blame. Pensions & Investments.