Institutional investors

Last on the list of OPM are the individuals who invest their own money on Wall Street. Rarely do they play a significant role in company financing, since their individual investments are too small to permit efficient fund raising. The only biotech companies where retail investors represent a majority of shareholders are those that have been abandoned by institutional investors, i.e., the road kill. 

Pharmaceutical R D is expensive to undertake and subject to an extraordinarily high risk of failure. Most recently, we have noted that even successfully marketed products such as Cox-2 inhibitors can be withdrawn from the market because of the occurrence of serious side-effects that were not observed during clinical trial programs submitted for regulatory approval. It is difficult, at best, to justify to corporate boards and major institutional investors that a company intends to pursue research platforms that have an inherently high risk of developmental failure or that have limited commercial prospects. 

The company doesn t show up on the radar screen of the Washington, D.C.-based Pension Rights Center, which helps workers who have been deprived of pension benefits, or that of the Council of Institutional Investors, which looks at corporate governance issues like executive pay and board oversight. Labor relations are so smooth that when 1 went to Rahway to meet with Fleming and other union officials, they insisted that I interview the plant management. 

Equity capital consists of the capital contributed by stockholders, together with earnings retained for reinvestment in the business. Stockholders purchase stocks in the expectation of getting a return on their investment. This return can come from the dividends paid annually to stockholders (the part of earnings returned to the owners) or from growth of the company that is recognized by the stock market and leads to an increase in the price of the stock. Most stock is usually held by sophisticated institutional investors such as banks, mutual funds, insurance companies, and pension funds. These investors employ expert analysts to assess the performance of companies... 

While the strides forward for corporate sustainability research have been impressive, the reality remains that only a small minority of institutional investors use this research. There is little consensus about how this analysis should be... 

Domini Social Investments manages more than 1.5 billion in assets for individual and institutional investors who wish to integrate social and environmental criteria into their investment decisions. 

Schneeweis, X, and Spurgin, R. (1999), Alternative Investments in the Institutional Portfolio, in The Handbook of Alternative Investment Strategies, X Schneeweis and J. Pescatore, Eds., Institutional Investor, New York, pp. 205-214. 

Short-term institutional investors include banks and building societies, money market fund managers, central banks and the treasury desks of some types of corporates. Such bodies are driven by short-term investment views, often subject to close guidelines, and will be driven by the total return available on their investments. Banks will have an addi-... 

Typically long-term institutional investors include pension funds and life assurance companies. Their investment horizon is long-term, reflecting the nature of their liabilities. Often they will seek to match these liabilities by holding long-dated bonds. 

Mixed horizon institutional investors are possibly the largest category of investors and will include general insurance companies and most corporate bodies. Like banks and financial sector companies, they are also very active in the primary market, issuing bonds to finance their operations. 

The other recent advance in bond trading has been the dealer-to-customer platforms, where institutional investors can compare the prices provided by several intermediaries simultaneously, with the obvious benefit for the final investor. 

The third phase of the European high-yield market s evolution appears to be following the US market s model, with an increased focus on higher qnality issuers, more investor-friendly debt structures, and expansion of the asset classes accessed by institutional investors. 

Although the Eurobond market has changed hugely over time, in some ways it remains close to its roots. The way bonds are traded is one of these. Most transactions are still done over the telephone between market professionals. Salespeople take orders from institutional investors and relay them to the traders. 

In both markets, dealers will bid for most securities in most cases. In the United States this is often done through bid lists. Big institutional investors send a selected group of dealers lists of securities on which the dealers are invited to bid. The timeframe for this bid wanted in comp (i.e., competition) approach is short—usually a few hours. Each dealer is then notified of the securities for which they are the highest bidder. For less liquid bonds, it is also common for dealers to work an order. Under this approach, an investor leaves an order with a dealer to buy or sell a set amount of securities within a spread range. The dealer then has a limited amount of time (usually one or two days) to source the bonds. In working an order, a dealer is functioning more like a broker. 

For index-linked gilts, institutional investors that are taxed are treated in the following way. An inflation tax relief is granted based on the inflation experienced between tax year-ends. This relief is deducted from the total return (calculated on a mark-to-market basis or an accrual basis, according to the an election made by the investor), and the difference is taxed. This means that index-linked enjoy a material tax advantage over nominal gilts—the intent and effect is that investors are only taxed on their real return, not on inflation compensation. 

The sterling securities markets are dominated by long-term institutional investors, namely pension funds and life assurance companies. This is particularly (we would say acutely) true of the index-linked market. Official statistics for pension fund investments are perceived to be of poor quality. They are now notorious after the suspension of pension fund statistics between January and May 2002, pending an investigation into a 105 billion downward revision to the value of end 1999 equity asset holdings (from 395 billion to 290 billion). Bearing this in mind. 

Institutional investors in the gilt market including fund managers, pension funds, and life companies. 

Institutional investors and other long-term holders of securities are able to enhance their returns by making their inventories available for repo trading. 

Institutional investors such as pension funds and insurance companies often prefer to enhance the income from their fixed interest portfolios by... 

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