what is Institutional Investor

**Institutional investors play a significant role in financial markets**, primarily due to their substantial resources, sophisticated investment strategies, and large trading volumes. Here's a detailed analysis of their impact and characteristics:

1. **Definition and Types**:
- Institutional investors are entities that pool money from individuals or other entities to invest in securities, real property, and other investment assets.
- They include diverse types such as commercial banks, pension funds, mutual funds, hedge funds, and insurance companies.
2. **Market Influence**:
- Institutional investors are major players in financial markets, often executing large trades that significantly influence stock prices.
- They account for more than 90% of all stock trading activity, which underscores their substantial market impact.
3. **Regulatory Treatment**:
- Institutional investors are subject to different regulatory frameworks compared to retail investors. They face fewer protective regulations due to their assumed knowledge and ability to protect themselves.
- They may have access to private placements and other investment opportunities not available to retail investors.
4. **Investment Strategies and Resources**:
- Institutional investors typically use advanced strategies and have dedicated research teams to analyze investment opportunities.
- They can conduct extensive research that may not be accessible to retail investors.
5. **Impact on Retail Investors**:
- Retail investors often look to institutional investors' regulatory filings to gauge which securities are worth buying personally.
- While institutional investors are often seen as the "smart money," their performance is not always indicative of market outperformance, and following them blindly can lead to losses.
6. **Characteristics**:
- Institutional investors are professional investors who make investing their main occupation.
- They are known for their large-scale investments and significant influence on the financial markets.

In conclusion, institutional investors are pivotal in financial markets due to their substantial size, sophisticated strategies, and regulatory treatment. Their actions can significantly impact market dynamics, and while they are often seen as a benchmark for retail investors, it's important to consider that their performance is not always indicative of market outperformance.