Institutional investors (pensions, mutual funds, insurers) bought toxic securities because their fee structures pay a percentage of assets managed while law (the 1940 Act) bars them from hedge-fund-style asymmetric profit-sharing; this creates an agency problem—'we have to put our money to work'—incentivizing them to keep assets growing rather than return money to clients, unlike hedge funds whose symmetric upside/downside incentives led them to return capital when good investments dried up.