Risk and Capital
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When I first looked at the assignment I asked myself first, what is institutional investing? It is money that you invest to achieve your investment goals and having it managed by a professional. The companies that provide this service can sell and trade large quantities of shares which can be managed better and easier. This also aids in their investment activities having fewer restrictions than an individual investor. Because of this they have better knowledge of investments and risks. Speaking of investments and risk, what risks are involved in institutional investing?
There is always a big risk when there is a fear of the unknown. Another big risk is a big loss with the large quantities that are being sold and bought. This could possibly lead to some of the investors to invest in sectors with higher risks. As always there is that risks of investing in companies with lifecycles in their peak. Beings that they do deal with larger quantities, it is easier to monitor the transactions more closely so they can stay on track. Then I wondered, what is the process of institutional investing?
The process starts with research which is performed in-depth. Then the managers and the analyst get together to communicate the information they have found. This is usually done weekly or monthly. Then the managers of the investment speak of the ideas and the actions that should