Anaya a Senior Company Secretary, has been invited for a panel discussion on the topic 'Investment trends in India and the role of institutional investors.' During the discussions, it was highlighted that domestic and fo

Domestic and foreign institutional investors are pivotal sources of capital and also provide the volume of trades for the markets to thrive. Institutional investors often provide not only money but also advice, networking, and other assistance (smart money) to the companies raising funds. Besides, they allow retail investors to invest in capital markets thus getting better returns than the bank deposit would grant them without need to gain expertise in financial markets and with reduced risk exposure. This means not only better opportunities to save money but also much higher chances of the income since the money managed by fund experts is working better. Importance of institutional investors Important Sources of Capital - Institutional Investors are a very important source of capital in the economy. They provide large chunks of capital to companies that fulfil their requirements without having to depend on a large number of small investors. Often before an IPO, investment banks ask institutional investors to buy the shares in order to ensure that the IPO is well subscribed. It reduces their dependency on retail investors. Benefits to Individual Investors - Institutional Investors have just pooled investment vehicles wherein a number of investors pool their money to form a large size entity that can invest on their behalf. Since not all investors are able to take positions in securities that require large capital commitments, they can enjoy those benefits through institutional investors. Also, they have their own teams of highly qualified personnel that study the securities and track the markets. They have professional management at every level. Individual Investors who lack all these skills get the benefit of highly knowledgeable expert management of their money. Preferential Treatment - Since Institutional Investors can influence the market because of their large size of investments, they get preferential treatment in terms of lower transaction costs, fast execution of their orders, etc. This saves time and money and ultimately benefits the investors who are a part of the investment pool.