IN 1990 TOTAL FINANCIAL assets in U.S. capital markets amounted to
$13.7 trillion, of which $3.4 trillion was equities, and the rest were
bonds, government securities, tax-exempt securities, and mortgages.
These financial assets were held by two principal types of investors:
individuals and institutions. The New York Stock Exchange defines an
institution as a firm that employs professionals to manage money for
the benefit of others (firms or individuals). At the end of 1990, $6.1
trillion of the total U.S. financial assets was held by institutions. Both
the amount of institutional assets and the fraction of the total they
represent have increased sharply over the past 30 years. In 1950, for
example, institutional assets comprised $107 billion out of a $500 billion
total, or 21 percent compared with 45 percent in 1990.1 The growth of
institutional ownership of equities has paralleled their growth in the
ownership of other financial assets. In 1955 institutions owned 23 percent
of equities compared with 77 percent owned by individuals; in 1990 institutions owned 53 percent and individuals 47 percent. Without
doubt, institutional ownership is a large and increasingly dominant
feature of U.S. financial markets.
