We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What are Institutional Shares?

Malcolm Tatum
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Institutional shares are mutual fund shares that are offered for sale to institutional investors only. In most cases, large blocks of these shares are sold as part of a package deal. In return for purchasing the larger volume of shares, the institution often receives some price breaks, including a discount on the transaction charges that are incurred as part of the purchase agreement. Owing to the fact that institutional shares are sold in large blocks, individual investors rarely, if ever, are in a position to purchase these types of investment shares.

A number of different businesses or institutions may choose to purchase institutional shares. In general, the idea behind the purchase is to hold those shares for long-term investment purposes, effectively creating a steady revenue stream for the institution. Businesses sometimes use this approach as a means to generate revenue that is set aside for the retirement plans offered to employees. At other times, the return generated from the shares is funneled into other ongoing products that are operated by the company.

There are several different types of entities that are likely to be interested in institutional shares. Along with corporations looking for a way to create a revenue stream to fund retirement plans, insurance companies often make use of this investment model to maintain a steady flow of return that can be used to honor claims submitted by their customers. In like manner, banks often purchase institutional shares as a way of generating income to fund bank operations, as well as generate funds to pay interest on all customer accounts that are structured to earn interest off the account balances. Independent pension funds will also purchase institutional shares as a means of generating revenue that is pumped back into the fund, keeping it viable over the long term.

In many cases, institutional shares are referred to as Y shares or Y class shares. This is because the shares are usually issued with a special letter class that helps to differentiate the shares from other classes that are widely available to individual investors. This special letter class is often included in the descriptive fund symbol that is used to identify the shares in the marketplace, making it much easier for potential investors to research the past performance of the shares without confusing them with other classes of shares issued by the same entity. The class of shares may also play a role in how swaps are conducted within a given mutual fund, since an investor is limited to swapping one set of Y shares for a corresponding set of Y shares available within the mutual fund.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum , Writer
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.

Discussion Comments

Malcolm Tatum

Malcolm Tatum


Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Read more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.