Luxembourg, 07 August 2025 – An increasing number of financial products promise retail investors easy access to traditionally professional asset classes. But the gap between private and institutional investing remains significant – due to limited product access, lack of scalability and unequal negotiating power. “It’s a misconception to think that the strategies used by major institutional players can simply be replicated with small amounts and a few innovative financial products”, says Stephan Blohm, Board Member at financial services provider securities.lu.
Equities, bonds, commodities, real property – and now even private equity and infrastructure: the investment landscape is expanding, with offerings claiming to open doors to institutional-grade opportunities at low entry points. But a closer look reveals that many of these products fall short of the standards institutional investors expect. “Buying an ETF that tracks listed investment firms or allocating a few thousand euros to a solar park via a digital platform is not the same as making a direct investment in private equity or infrastructure”, explains Blohm. Institutional investors operate on a completely different scale and negotiate under entirely different conditions.
At first glance, some investment offerings may seem suitable not only for private investors, but also for semi-professional or smaller institutional investors such as family offices or foundations. However, their options remain limited. “When infrastructure investments have to be structured in small tranches, costs rise and potential returns decline”, Blohm points out. And with every product layer, the issuer takes a cut, thus further reducing the investor’s share.
Another key difference lies in diversification. While ETFs promise broad global exposure even at low entry points, the underlying portfolio architecture is often pre-defined. “Weighting is dictated by the product structure, not by the investor’s own strategy”, Blohm adds. “In the institutional space, it’s standard practice to allocate across multiple asset classes based on factors like correlation, cash flow and liquidity needs. That level of customisation is hard to achieve on a smaller scale.”
Information access also separates professional investors from the rest. Institutional players rely on specialised databases and teams of analysts. Their decisions are informed by models, internal research, market signals and early indicators – not media headlines. “What sets professionals apart is the speed, depth and quality of their information processing”, Blohm highlights.
Moreover, institutional investors operate under strict frameworks – whether through internal committees, regulatory requirements or clearly defined processes. Retail investors, by contrast, often act more spontaneously. “Trading without a professional infrastructure and decision-making framework doesn’t necessarily make someone a gambler”, says Blohm, “but it does mean they’re not operating like a professional.”
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