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New Trends in Institutional Investing

Edmund A. Mennis
Financial Analysts Journal
Vol. 24, No. 4 (Jul. - Aug., 1968), pp. 133-138
Published by: CFA Institute
Stable URL: http://www.jstor.org/stable/4470383
Page Count: 6
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New Trends in Institutional Investing
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Abstract

The growing concentration of investing in institutional hands has been accompanied by increased competition for the individual's savings dollar. This competition has focused on "performance," defined as near-term capital appreciation. As a result, institutional investment portfolios have increased common stock ratios, concentrated in a relatively few securities, and increased portfolio turnover. Consequently movement of institutional funds has had an important impact on prices and price-earnings ratios and has not increased market stability. Stock exchange firms have developed special services to take care of these institutions, trading on regional exchanges and "Third Markets" has increased, and the disposition of institutional brokerage commissions has interested regulatory authorities. The capital markets have also been affected, as funds have flowed into equities and away from debt. Continuation of these trends will significantly change the nature of institutional investors, the stock exchange institutions that serve them, and the capital markets themselves.

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