The strategic distribution of investment capital by large financial institutions into various asset classes.
Institutional allocation refers to the process by which large entities such as pension funds, mutual funds, insurance companies, and endowments decide how to distribute their capital across different investment opportunities. This involves a rigorous analysis of risk, return, and diversification to meet their long-term financial objectives. The inclusion of an asset class in institutional allocation often signifies its maturation and increasing acceptance within the broader financial markets.