Institutional investor

An organisation that invests large pools of money on behalf of others or for a long-lived purpose, such as a pension fund, endowment, insurer or sovereign wealth fund.

Example

A university endowment investing in private equity funds.

Important

Its obligations and governance shape its behaviour more than its stated horizon.

Related terms

• Limited partner (LP) — An investor in a private fund structured as a limited partnership, who commits capital, has limited liability and generally has little control over investment decisions.
• Family office — An organisation that manages the investments and often the wider financial affairs of one wealthy family or a small group of families.

Lessons that explain it

• Pensions, endowments and family offices invest on different clocks — Institutional investors and family offices manage large pools of capital with specific obligations and time horizons, which determine what they buy, how long they hold and how they behave in a crisis. (10 min)

All 578 terms in the Investing glossary