Investors – Retail vs Institutional

Investors are not all the same, and there are several distinctions between institutional investors and non-institutional, or retail, investors. For markets like ours here in the Philippine Stocks Exchange, especially for us traders and investors , It’s important to know the difference. If you’re thinking about investing in a stock or mutual fund that has been widely covered in the financial press, you probably don’t qualify as an institutional investor. Indeed, if you’re wondering what an institutional investor is, you’re probably not one. Let us take use of this chance to outline some of the distinctions.

Institutional Investors

Institutional investors are the whales of the investment world. Pension funds, mutual funds, money managers, insurance firms, investment banks, commercial trusts, hedge funds, and some private equity investors are among the participants. They trade enormous blocks of stock and have a significant impact on stock market movements. Institutional investors are subject to fewer of the protective rules that the Securities and Exchange Commission (SEC) gives to the average, everyday investor since they are regarded sophisticated investors who are aware and thus less likely to make foolish investments.

Retail Investors

Any investor who is not an institutional investor is classified as a retail, or non-institutional, investor. Which basically is Us! That includes almost everyone who uses a broker, bank, or real estate agent to acquire and sell debt, equity, or other investments. These individuals are not investing on behalf of others; rather, they are managing their own funds. Personal ambitions, such as planning for retirement, saving for their children’s education, or funding a significant purchase, drive non-institutional investors.

Can You Spot Them?

Unfortunately, its not easy to spot Institutional investors from retail investors here in the Philippine stock market due to the size of our market and the privacy laws that we have. Your best bet is to look for big blocks of shares being moved around. 

Retail investors are quite to spot since they most likely are using retail dominant brokers like COL Financial, First Mero Sec, Philstocks, MyTrade, and many more. Also, the volume they place is not that big.