Which organization typically acts as institutional investors?

Pension funds typically act as institutional investors because they manage large sums of money on behalf of individuals for future retirement benefits. These funds are designed to provide financial security for retirees, and as such, they invest in a variety of assets including stocks, bonds, real estate, and other investment vehicles with the goal of growing the capital to meet future payout obligations. The scale of their operations allows them to influence market trends and investment strategies significantly.

In contrast, private individuals and small businesses generally do not have the same level of financial resources or investment strategies characteristic of institutional investors. While investment clubs may pool resources for investing, they don't reach the institutional scale or operate with the same objectives as pension funds. Thus, pension funds are the quintessential example of institutional investors, highlighting their crucial role in financial markets.