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

Head of the Indonesian Stock Exchange (BEI) West Java Representative Office, Achmad Dirgantara, said that individual investors can be anyone who already has a resident identity card (KTP) and has an account at a bank. Meanwhile, institutional investors consist of Pension Funds, Banks, Insurance Companies, Foundations and Endowment Funds which are managed by professionals. These institutions transact in the interests of their respective clients.

"If individual investors have limited capital, then institutional investors have relatively large funds under management. Therefore, institutional investors are not as flexible as individual investors in transacting their share portfolios on the IDX," said Achmad, Friday (26/7/2024).

"Institutional investors generally tend to choose shares with a large market capitalization value and strong fundamentals or blue chip shares. And the profits from investing are not as high as the potential return on shares in the second layer which can be purchased more easily by individual investors," he added.

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

"Individual investors generally rely more often on technical performance as a reference to the rise and fall of share prices. Meanwhile, institutional investors generally tend to use the company's fundamental performance as a reference before choosing shares to place 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 transact their portfolio within a certain time period according to the directions of their respective institutions.

According to Achmad, it is also easier for individual investors to choose shares that suit the business sector they like or are good at. Meanwhile, institutional investors have limitations on the business sectors or types of business permitted by the institutions they represent.

"Another important strategy in investing is diversification. If you have large funds, investors have the responsibility to produce returns according to the target," he said.

To make it easier to follow market movements, institutional investors generally have a strategy for buying shares that are constituents of one of the stock indexes they choose. Of course, movements in the composite stock index on the IDX are also greatly influenced by the buying and selling actions of institutional investors. (Parno)