An investor confidence index maintained by State Street Global Markets posted a 106.8 reading for the four-week period ending June 21, up 11.9 points from the revised reading 94.9 for the previous four-week period.
The index looks at investors globally as well as by region. The increase of the global index number was largely driven by an increase in risk appetite among North American investors, State Street Global Markets said.
State Street Global Markets is the investment research and trading arm of State Street Corp., the Boston-based financial services company.
Since mid 2009, the monthly State Street Investor Confidence index has used a reading of 100 to indicate neutral. A reading above 100 signifies that institutional investors are deploying more exposure to risky assets. A reading below 100 suggests those investors are looking to reduce their exposure to risky assets. The index was developed by Harvard University professor Kenneth Froot and Paul O’Connell of State Street Associates to measure investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors.
In a statement, Froot commented on the index’s most recent reading.
“The robust increase in the top-line Global ICI (investor confidence index) number shows that institutional investors took somewhat contrarian positions during the month,” Froot said. “We witnessed selling of US equities, buying of European equities, and significant buying of emerging markets equities. These reallocations run counter to price movements over the period, though it should be noted that our data sample ends on June 21 and hence does not cover the most recent downturn in equity prices. Overall, our data suggest that institutional investors are content to ‘take the other side’ of these price moves.”