(Learn how and when to remove these template messages)

Please helpimprove this articlebyadding citations to reliable sources. Unsourced material may be challenged and removed.

Institutional investornews

(Learn how and when to remove this template message)

You can help. Thediscussion pagemay contain suggestions.

(Learn how and when to remove this template message)

Aninstitutional investoris an entity which pools money to purchasesecuritiesreal property, and other investment assets or originate loans. Institutional investors includebanksinsurance companiespensionshedge fundsREITsinvestment advisorsendowments, andmutual funds. Operating companies which invest excess capital in these types of assets may also be included in the term.Activistinstitutional investors may also influencecorporate governanceby exercising voting rights in their investments.

Although institutional investors appear to be more sophisticated than retail investors, it remains unclear if professional active investment managers can reliably enhance risk adjusted returns by an amount that exceeds fees and expenses of investment management. Lending credence to doubts about active investors ability to beat the market,passive index fundshave gained traction with the rise of passive investors: the three biggest US asset managers together owned an average of 18% in theS&P 500 Indexand together constituted the largest shareholder in 88% of the S&P 500 by 2015.1The potential of institutional investors in infrastructure markets is increasingly noted after financial crises in the early twenty-first century.2

Institutional investors as financial intermediaries

Inscription honoring Aristoxnos, son of Demophon, probably benefactor of the gymnasium in Athens, late third or second century BC., Muse du Louvre

Roman law ignored the concept ofjuristic person, yet at the time the practice of privateevergetism(which dates to, at least, the 4th century BC in Greece) sometimes led to the creation of revenues-producing capital which may be interpreted as an early form of charitable institution. In some African colonies in particular, part of the citys entertainment was financed by the revenue generated by shops and baking-ovens originally offered by a wealthy benefactor.3In the South of Gaul,aqueductswere sometimes financed in a similar fashion.4

The legal principle of juristic person might have appeared with the rise of monasteries in the early centuries ofChristianity. The concept then might have been adopted by the emerging Islamic law. Thewaqf(charitable institution) became a cornerstone of the financing of education, waterworks, welfare and even the construction of monuments.5Alongside some Christian monasteries6the waqfs created in the 10th century AD are amongst the longest standing charities in the world (see for instance theImam Reza shrine).

Following the spread of monasteries, almhouses and other hospitals, donating sometimes large sums of money to institutions became a common practice in medieval Western Europe. In the process, over the centuries those institutions acquired sizable estates and large fortunes in bullion. Following the collapse of the agrarian revenues, many of these institution moved away from rural real estate to concentrate on bonds emitted by the local sovereign (the shift dates back to the 15th century for Venice,7and the 17th century for France8and the Dutch Republic9). The importance of lay and religious institutional ownership in the pre-industrial European economy cannot be overstated, they commonly possessed 10 to 30% of a given region arable land.

In the 18th century, private investors pool their resources to pursue lottery tickets andtontineshares allowing them to spread risk and become some of the earliest speculative institutions known in the West.

Following several waves of dissolution (mostly during the Reformation and the Revolutionary period) the weight of the traditional charities in the economy collapsed; by 1800, institutions solely owned 2% of the arable land in England and Wales.10New types of institutions emerged (banks, insurance companies), yet despite some success stories, they failed to attract a large share of the publics savings and, for instance, by 1950, they owned 48% of US equities and certainly even less in other countries.11

Because of their sophistication, institutional investors may be exempt from certain securities laws. For example, in the United States, institutional investors are generally eligible to purchaseprivate placementsunder Rule 506 ofRegulation Dasaccredited investors. Further, large US institutional investors may qualify to purchase certain securities generally restricted from retail investment underRule 144A.

In Canada, companies selling to accredited investors are waived from needing to file with the security exchange commission.

As intermediaries between individual investors and companies, institutional investors are important sources of capital in financial markets. By pooling constituents investments, institutional investors arguably reduce the cost of capital for entrepreneurs while diversifying constituents portfolios. Their greater ability to influence corporate behaviour as well to select investors profiles may help diminishagency costs.

Institutional investors investment horizons differ, but do not share the same life cycle as human beings. Unlike individuals, they do not have a phase of accumulation (active work life) followed by one of consumption (retirement), and they do not die. Here insurance companies differ from the rest of the institutional investors; as they cannot guess when they will have to repay their clients. Therefore, they need highly liquid assets which reduces their investment opportunities. Others like pension funds can predict long ahead when they will have to repay their investors allowing them to invest in less liquid assets such asprivate equitieshedge fundsorcommodities. Finally, other institutions have an extended investment horizon, allowing them to invest in illiquid assets as they are unlikely to be forced to sell them before term.

In various countries different types of institutional investors may be more important. Inare very important, while indeveloped countriespension fundsmay be more important.citation needed

Japan is home to the worlds largest pension fund (GPI) and is home to 63 of the top 300 pension funds worldwide (by Assets Under Management). These include:

Government Pension Investment ($1045.5billion [2011])

Local Government Officials ($165billion [2004])

Pension Fund Association ($117billion [2004])

The most important Canadian institutional investors are:

Canada Pension Plan Investment BoardC$282.6Billion [2015])

Caisse de dpôt et placement du Qubec(C$248 Billion [2015])

Ontario Teachers Pension Plan(C$171.4 Billion [2015])

British Columbia Investment Management (C$123.6 Billion [March 31, 2015])

Alberta Investment Management(C$83.9Billion [December 31, 2014])

In the UK, institutional investors may play a major role in economic affairs, and are highly concentrated in theCity of Londons square mile. Their wealth accounts for around two thirds of the equity in public listed companies. For any given company, the largest 25 investors would have to be able to muster over half of the votes.12

The IMA, ABI, NAPF, and AITC, plus the British Merchant Banking and Securities House Association were also represented by the Institutional Shareholder Committee (ISC). As of August 2014 the ISC effectively became the Institutional Investors Committee (IIC), which comprises the Association of British Insurers, the Investment Management Association and the National Association of Pension Funds.14

List of institutional investors in the United Kingdom

Fichtner, Jan; Heemskerk, Eelke; Garcia-Bernardo, Javier (2017). Hidden power of the Big Three? Passive index funds, re-concentration of corporate ownership, and new financial risk.

Green Infrastructure Financing: Institutional Investors, PPPs and Bankable Projects

N. Tran (2008) Les cits et le monde du travail urbain en Afrique romaine, in

, M. Cbeillac-Gervasoni, C. Berrendonner and L. Lamoine (ed.), pp. 33348.

: proprit et gestion de leau dans lconomie des cits de lEmpire, in

, M. Cbeillac-Gervasoni, C. Berrendonner and L. Lamoine (ed.), pp. 36578

J. Loiseau (2004) La Porte du vizir: programmes monumentaux et contrôle territorial au Caire la fin du XIVe sicle.

:M. Lewis (oct. 2010) Beware of Greeks Bearing Bonds.

Rich and poor in Renaissance Venice. The Social Institutions of a Catholic State

Berger P. (1978) Rural Charity in Late Seventeenth Century France: The Pontchartrain Case.

Gelderblom O. and J. Jonker (2007) With a view to hold. The emergence of institutional investors on the Amsterdam securities market during the 17th and 18th centuries.

G. Clark and A. Clark (2001) Common Rights to Land in England, 14751839.

Chen X., J. Harford and K. Li (2007) Monitoring: Which institutions matter?.

The IMA is the result of a merger in 2002 between the Institutional Fund Managers Association and the Association of Unit Trusts and Investment Funds

AA Berle, Property, Production and Revolution (1965) 65 Columbia Law Review 1

LW Beeferman, Pension Fund Investment in Infrastructure: A Resource Paper, Capital Matter (Occasional Paper Series), No.3 December 2008

BS Black and JC Coffee, Hail Britannia?: Institutional Investor Behavior under Limited Regulation (1994) 92(7) Michigan Law Review 1997

G Clark and A Clark, Common Rights to Land in England, 14751839 (2001) 61(4) The Journal of Economic History 1009

JC Coffee, Liquidity versus Control: The Institutional Investor as Corporate Monitor (1991) 91 Columbia Law Review 12771368

BL Connelly, R Hoskisson, L Tihanyi & ST Certo,Ownership as a Form of Corporate Governance(2010) Journal of Management Studies, Vol 47(8):1561-1589.

PL Davies, Institutional investors in the United Kingdom in T Baums

, Institutional Investors and Corporate Governance (Walter de Gruyter 1994) ch 9

MN Firzli & V Bazi, Infrastructure Investments in an Age of Austerity: The Pension and Sovereign Funds Perspective, USAK/JTW 30 July 2011 and Revue Analyse Financire, Q4 2011

KU Schmolke, Institutional Investors Mandatory Voting Disclosure: The Proposal of the European Commission against the Background of the US Experience (2006) EBOLR 767

Green Infrastructure Financing: Institutional Investors, PPPs and Bankable Projects

GP Stapledon, Institutional Shareholders and Corporate Governance (Oxford 1996)

Loan qualifying investor alternative investment fund(LQIAIF)

Qualifying investor alternative investment fund(QIAIF)

History of private equity and venture capital

Articles needing additional references from February 2011

Wikipedia articles needing rewrite from February 2011

Articles with unsourced statements from October 2017

This page was last edited on 15 April 2019, at 17:28

Text is available under the; additional terms may apply. By using this site, you agree to theTerms of UseandPrivacy Policy. Wikipedia® is a registered trademark of theWikimedia Foundation, Inc., a non-profit organization.