Institutional mutual funds cater specifically to institutional and other large investors. They differ from retail mutual funds in important aspects that could affect their relative performance: very high minimum initial and subsequent investment requirements that put them out of the reach of individual investors, large and discreet flow of funds, and a closer relationship between the fund manager and the institutional investor who closely monitors performance using sophisticated measures. Although a substantial amount of literature exists on retail mutual fund characteristics and performance, institutional mutual funds have received little attention to date. This study examines whether differences in fund characteristics influence the relative performance of institutional funds, before fees and expenses. Using mutual fund historical data from the Morningstar database, appropriate benchmarks and the established multifactor models, Fama and French three-factor model (FF3F) and Carhart’s four factor model (C4F), performances of institutional and retail mutual funds are compared as overall fund classes, and then in categories derived from Morningstar’s style box. Institutional funds’ superior performance detected with the CAPM disappears when tested with FF3F and C4F. In all models, institutional funds outperform retail funds in the large-cap category with the statistically significant difference being attributable to “alphas” (manager skill) in this category. Evidence is mixed in other categories, and differences are not significant.