Who would most likely be categorized as an institutional investor?

An institutional investor is typically defined as an organization that invests on behalf of its members or clients, often managing pooled funds from a variety of sources. In this context, a pension fund is a prime example of an institutional investor. Pension funds are established to manage employee retirement assets, allowing for large-scale investments, diversification, and professional management that individual investors or smaller entities may not have access to.

In contrast, individual investors, such as families, single individuals buying stocks, or small businesses purchasing bonds, are typically categorized as retail investors. Retail investors usually invest their personal assets for individual goals, rather than on behalf of a larger group or organization. Thus, the pension fund’s role in managing significant sums of money specifically aimed at long-term employee benefits aligns perfectly with the definition and characteristics of institutional investors.