MBA (Finance) – IV Semester, Investment and Portfolio Management, Unit 1.1
Types of Investors
Investors may be individuals and institutions. Individual investors operate alongside institutional investors in the investment arena. However, their characteristics are different.
Types of Investors
Investors may be individuals and institutions. Individual investors
operate alongside institutional investors in the investment arena. However,
their characteristics are different.
Individual investors are large in number but their investable
resources are comparatively smaller. They generally lack the skill to carry out
extensive evaluation and analysis before investing. Moreover, they do not have
the time and resources to engage in such an analysis.
Institutional investors, on the other hand, are the organizations
with surplus funds who engage in investment activities. Mutual funds,
investment companies, banking and non-banking companies, insurance
corporations, etc. are the organizations with large amounts of surplus funds to
be invested in various profitable avenues.
These institutional investors are fewer in number compared to
individual investors, but their investable resources are much larger. The
institutional investors engage professional fund managers to carry out
extensive analysis and evaluation of different investment opportunities.
As a result their investment activity tends to be more rational and
scientific. They have a better chance of maximizing returns and minimizing
risk.
The professional investors and the unskilled individual investors
combine to make the investment arena dynamic.
