How much money do institutional investors have?
What percentage of investors are institutional? Institutional investors account for about 80% of the volume of trades on the New York Stock Exchange.
What percentage of investors are institutional? Institutional investors account for about 80% of the volume of trades on the New York Stock Exchange.
On a global basis, institutional investors represent more than US$70 trillion in investable assets, and, as such, wield significant influence over capital markets.
The Bottom Line
Institutional investors are the big fish on Wall Street and can move markets with their large block trades. The group is generally considered more sophisticated than the retail crowd and often subject to less regulatory oversight.
Institutional investors are entities or organizations that pool together large sums of money to invest in a variety of asset classes, including but not limited to stocks and ETFs. They operate on a scale that's often vast, compared to individual retail investors.
Overall, institutional investors (which may offer both active and passive funds) own 80% of all stock in the S&P 500.
| Institutional Investor | Retail Investor |
|---|---|
| Must have over $50 million in assets according to FINRA | No minimum investing requirement |
| Invests as a profession | Invests to fund goals such as retirement |
| Purchases or sales can affect stock prices | Likely doesn't have the ability to move markets |
In that environment, the median institutional investor produced 9.5 percent in annual returns from 2012 to 2021 (exhibit). Institutional investors we interviewed unanimously agree that the current environment is radically different from the global investment conditions of the previous three decades.
| # | Name | 2021 |
|---|---|---|
| 1 | Vanguard Group | $5,407,000 |
| 2 | BlackRock | $5,694,077 |
| 3 | State Street Global | $2,905,408 |
| 4 | Fidelity Investments | $2,032,626 |
Institutional investors are organizations that pool together funds on behalf of others and invest those funds in a variety of different financial instruments and asset classes. They include investment funds like mutual funds and ETFs, insurance funds, and pension plans as well as investment banks and hedge funds.
Who qualifies as an institutional investor?
Institutional investors are legal entities that participate in trading in the financial markets. Institutional investors include the following organizations: credit unions, banks, large funds such as a mutual or hedge fund, venture capital funds, insurance companies, and pension funds.
Within the world of corporate governance, there has hardly been a more important recent development than the rise of the 'Big Three' asset managers—Vanguard, State Street Global Advisors, and BlackRock.
That said, institutional buyers are still a major force in the U.S. housing market, with a particular focus on single-family rental homes. These large investors typically purchase properties in bulk, often including entire neighborhoods or even small towns.
2. Under Section 13(f)(5)(A) of the Exchange Act, Berkshire Hathaway is an institutional investment manager that exercises investment discretion over $100 million or more in reportable securities, as defined in Rule 13f-1(c) under the Exchange Act.
Slow Updates. The first, and usually most obvious, reason to explain why an institutional investor holds more than 100% of a company's shares stems from delays in updating publicly available data.
Robinhood Markets, Inc. (US:HOOD) has 621 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC). These institutions hold a total of 686,817,978 shares.
It tracked a hypothetical $10,000 investment in the S&P 500 stock index made on Jan 1, 1980 through the end of 2022. If the money was left untouched, the $10,000 invested in 1980 was worth $1.26 million at the end of 2022.
Vanguard set out in 1975 under a radical ownership structure that remains unique in the asset management industry. Our company is owned by its member funds, which in turn are owned by fund shareholders.
Berkshire owns shares in two prominent S&P 500 funds, but they're far from the only ones on the market. Each one you come across will give you roughly the same exposure and roughly the same returns. The major differentiator is cost. Take the two funds in Buffett's portfolio.
To be sure, not all institutional investors refrain from shorting. Many hedge funds sell short. And not all institutional investors should embrace shorting, given its costs and risks.
Can an individual be an institutional investor?
An institutional investor trades large volumes of securities on behalf of an individual or shareholder. This large-volume trade motivates brokerages to offer them lower fees. A retail investor is an individual who invests their own capital, typically at lower frequencies and volumes.
If the average dividend yield of your portfolio is 4%, you'd need a substantial investment to generate $3,000 per month. To be precise, you'd need an investment of $900,000. This is calculated as follows: $3,000 X 12 months = $36,000 per year.
- High-yield savings accounts.
- Money market funds.
- Short-term certificates of deposit.
- Series I savings bonds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
As a result of his immense investment success, Buffett is one of the best-known investors in the world. As of March 2024, he had a net worth of $134 billion, making him the seventh-richest person in the world. Omaha, Nebraska, U.S.
In addition, institutional investors frequently have access to specialised investment strategies, market insights, and research that can assist them in making informed decisions and identifying opportunities. They can make money in a variety of ways, including dividends, interest, capital gains, and client fees.
References
- https://www.sec.gov/litigation/admin/34-43909
- https://www.sec.gov/Archives/edgar/data/320193/000032019323000106/R19.htm
- https://www.huduser.gov/portal/periodicals/em/winter23/highlight2.html
- https://en.wikipedia.org/wiki/Apple_Inc.
- https://www.investopedia.com/articles/financial-theory/11/introduction-institutional-investing.asp
- https://fintel.io/so/us/hood
- https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/institutional-investor/
- https://www.huduser.gov/portal/periodicals/em/winter23/highlight1.html
- https://hbr.org/2019/02/how-big-a-problem-is-it-that-a-few-shareholders-own-stock-in-so-many-competing-companies
- https://www.tipranks.com/stocks/aapl/ownership
- https://www.techopedia.com/who-owns-the-most-blk-stock
- https://www.bankrate.com/investing/low-risk-investments/
- https://www.cfainstitute.org/en/membership/professional-development/refresher-readings/portfolio-management-institutional-investors
- https://www.dividend.com/how-to-invest/who-owns-apple-inc-aapl/
- https://www.mckinsey.com/industries/private-equity-and-principal-investors/our-insights/performance-edge-investors-hone-their-strategies-for-a-new-era
- https://www.cnbc.com/2024/03/08/warren-buffett-berkshire-hathaway-owns-2-etfs.html
- https://www.indeed.com/career-advice/finding-a-job/institutional-vs-retail-investors
- https://seekingalpha.com/article/4513425-institutional-investors
- https://lyonswealth.com/blog-details/how-much-money-do-i-need-to-invest-to-make-3000
- https://www.techopedia.com/who-owns-amazon
- https://www.koyfin.com/company/aapl/dividends/
- https://investorplace.com/2023/11/how-institutional-buyers-are-changing-the-face-of-the-u-s-housing-market/
- https://corpgov.law.harvard.edu/2019/02/18/institutional-investors-as-short-sellers/
- https://www.trading212.com/learn/investing-101/retail-and-institutional-investors
- https://www.suzeorman.com/blog/Investing-for-Your-Long-Term-Goals
- https://www.pionline.com/largest-money-managers/2023
- https://navi.com/blog/institutional-investors/
- https://www.investopedia.com/ask/answers/07/institutional_holdings.asp
- https://www.investopedia.com/ask/answers/06/institutionalinvestor.asp
- https://blogs.law.ox.ac.uk/oblb/blog-post/2023/04/giant-asset-managers-big-three-and-index-investing
- https://www.investopedia.com/terms/i/institutionalinvestor.asp
- https://corporate.vanguard.com/content/corporatesite/us/en/corp/who-we-are/sets-us-apart/index.html
- https://www.investopedia.com/articles/markets/120115/top-5-apple-shareholders.asp
- https://en.wikipedia.org/wiki/Warren_Buffett
- https://fintel.io/so/us/ko
- https://www.alphaquery.com/stock/AAPL/fundamentals/quarterly/shareholders-equity
- https://companiesmarketcap.com/apple/total-debt/
- https://www.barrons.com/articles/warren-buffett-berkshire-hathaway-apple-stock-d94df8c7
- https://inshorts.com/en/news/apple-created-300-millionaires-through-its-ipo-1481554537955
- https://usafacts.org/articles/what-percentage-of-americans-own-stock/
- https://fintel.io/so/us/aapl/vanguard-group
- https://www.usnews.com/news/national-news/articles/2021-03-15/who-owns-stocks-in-america-mostly-its-the-wealthy-and-white
- https://in.marketscreener.com/quote/stock/APPLE-INC-4849/company/
