At the end of 1998 US institutions had $16.3 trillion in assets, compared with just $6.3 trillion in 1990 the Conference Board noted in its Institutional Investment Report.
Pension funds still represent the largest block of US institutional assets (47.5%), while open ended mutual funds account for 21.9% of the total, up from 14.5% a decade ago.
Insurance companies constitute 15.2% of the total, down from 21% in 1990. Bank and trust companies represent 12.2%, roughly the same as the 12% a decade earlier. Foundations now make up 2.4% of the total versus 2.3% in 1990.
Private trustee funds are 26.9% of the total, compared with 6.1% for private insured and 14.5% for state and local plans.
State Rises, Private Slips
Those state and local pension funds devote more than two-thirds (69.3%) of their total assets to equities, up from 36.1% in 1990. These programs are “overwhelmingly the most activist institutional investors with regard to corporate governance matters,” according to the press release.
Corporate pension funds actually lost ground as a percentage of total equity ownership, dropping from 16.8% of total equities in 1990 to 13.2% by the end of last year.
According to the Conference Board, possible reasons for the declining institutional share of the equity market could be the result of:
- Trend by institutional investors to invest in hedge funds and other “private market” equities
- A strong increase in individual shareholdings prompted by strong markets and easier trading access
- New initial public offerings (IPOs), which are less attractive to institutional investors
- Massive restructurings and stock repurchase programs by large companies generally held by institutions
Institutional investor assets experienced phenomenal growth over the past three years, rising
18.7% from 1996 – 1997
15.1% from 1997 – 1998
14.0% from 1998 – 1999