What is the role of institutional investors on Wall Street?

Institutional investors are a powerful force on Wall Street, accounting for the majority of trading volume in equities and helping to shape the direction of the market. These investors are typically large organizations such as pension funds, endowments, and mutual funds that manage large pools of money on behalf of clients. Their investment strategies often involve holding large positions in the stocks of individual companies, as well as actively trading in the market. One of the key roles of institutional investors is to provide liquidity to the market, meaning they buy and sell large quantities of stocks on a daily basis, helping to facilitate trading and keeping the market functioning smoothly. They also help to allocate capital to businesses by investing in stocks and bonds, which enables companies to raise funds and grow their business. In addition to providing liquidity and capital, institutional investors also play a significant role in corporate governance. Because they hold such large positions in individual companies, they often have a say in how those companies are run and may take an active role in pushing for changes such as management shake-ups or financial restructuring. Overall, institutional investors are a critical part of the financial ecosystem, playing a major role in the functioning of the stock market and the allocation of capital to businesses.