PORTALJABAR, BANDUNG CITY - The Indonesia Stock Exchange (IDX) notes that not only individual investors are listed on the exchange, but also institutional investors. If individual investors transact on behalf of themselves, then institutional investors will represent their institutions.

Head of the Representative Office of the Indonesia Stock Exchange (IDX) West Java Achmad Dirgantara said, individual investors can be anyone who already has a resident identity card (KTP) and has an account at the bank. Meanwhile, institutional investors consist of pension funds, banks, insurance companies, foundations, and endowment funds managed by professionals. These institutions transact on behalf of their respective clients.

“While individual investors have limited capital, institutional investors have relatively large managed funds. Therefore, institutional investors are not as flexible as individual investors in trading their stock portfolio on the IDX,” said Achmad, Friday (26/7/2024).

“Institutional investors generally tend to choose stocks with large market capitalization values and strong fundamentals or blue chips stocks. And the return on investment is not as high as the potential return on shares in the second layer that can be more easily purchased by individual investors,” he added.

However, because the transaction value is large, according to Achmad, the nominal profit obtained by institutional investors is certainly much greater than the transaction value of individual investors.

“Individual investors generally rely more on technical performance references from the ups and downs of stock prices. Meanwhile, institutional investors generally tend to use references to the company's fundamental performance before choosing stocks to be placed in their portfolio basket,” he explained.

The character of the stock investment period is long-term. This strategy can be easily followed by individual investors. Meanwhile, institutional investors may have an obligation to trade their portfolio within a certain period of time according to the direction of their respective institutions.

According to Achmad, it is also easier for individual investors to choose stocks that are in line with the business sectors they like or are good at. Institutional investors, on the other hand, are limited to the business sectors or types of businesses permitted by the institution they represent.

“Another important strategy in investing is diversification. If you have a large fund, investors have the responsibility to generate returns according to the target,” he said.

To make it easier to follow market movements, institutional investors generally have a strategy of buying stocks that are constituents in one of their chosen stock indices. Of course, the movement of the composite stock index on the IDX is also greatly influenced by the buying and selling actions of institutional investors. (Parno)

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