Institutional investors: activist investors seen boosting ownership.

Despite aggregate stock market declines in the last few years, institutional investors have boosted their equity ownership control of U.S. markets, according to The Conference Board in its Institutional Investment Report. Data show that U.S. institutional investors controlled $19.63 trillion in assets in 2003, nearly matching their 1999 peak of $19.66 trillion. That was before the market shakeout in 2000-02, when total institutional investor assets dropped to $17.5 trillion.

"These investors tend to be the most activist in demanding corporate governance reforms and will continue to have a profound impact on every company not only in the U.S. but also in global markets, since U.S. investors have tended to be out in front of global shareholder activism," says Carolyn Kay Brancato, director of The Conference Board's Global Corporate Governance Research Center.

U.S. institutional investors have continued to hold 19 to 20 percent of total equity assets, down slightly from their 22.5 percent peak in 1999. The relative decline in share is attributed to the fact that these institutions tended to place a greater percentage of their assets in the harder-hit equity markets of 2000-2002 than did individual investors.

Looking at the mix of institutional investors, pension funds owned 40.7 percent of total U.S. equity assets in 2003; investment companies, 22 percent; insurance companies, 23.3 percent; bank and trust companies, 11.7 percent; and foundations, 2.4 percent. These percentages represent a change in the mix during the past 25 years, as investment companies and mutual funds have grown the fastest (2.6 percent of assets in 1980 to 22 percent in 2003), followed by pension funds (32.6 percent in 1980 to 40.7 percent in 2003). At the same time, bank and trust company holdings have declined substantially, from 38.8 percent of total assets in 1980 to 11.7 percent in 2003.