A collective term for organizations which invest large sums of money in both government securities and the private sector, particularly through the Stock Exchange. The emergence in recent years of so many organizations representing other people’s savings (e.g. pension funds, unit trusts, trade union funds) together with the steady increase in insurance companies has tended to make institutional investors a major force in the stock market; they own a high proportion of total available shares and securities. Very often it is their vote that determines the future of many a private or public enterprise. They normally employ specialists in the investment field to keep a careful eye on the market and the portfolios they hold with the object of maximizing benefits. Their effective power was considerably reinforced by the Trustee Investment Act 1961, which gave wider powers to trustees of other people’s money to invest in quoted shares of public companies.
Reference: The Penguin Business Dictionary, 3rd edt.