It has been my experience that institutional investors will accept lower returns for lower volatility. The average investor tends to want higher returns than what institutional investors are willing to accept. We see where the average individual investor thinks they should make 10% a year on average in stocks but historically stocks over time have averaged closer to 6-8% depending on the time frame used. 

 

Why do you think institutions are willing to accept lower returns? 

How might this impact their bond portfolio and how they manage it?