Institutional Investor Confidence Returns to Normal
A State Street press release said that, regionally, confidence of North American institutional investors decreased slightly (from 91.5 to 91.1) as did the confidence of Asian investors (from 77.9 to 77.5). For European institutional investors, though, confidence increased for the fourth month in a row, reaching 97.9 in April.
Harvard University professor Ken Froot, co-developer of the index, said in the release that the levels were in a more normal range after very low levels in early 2006.
The index is based on financial theory that assigns precise meaning to the willingness of investors to hold proportionally more or less of their portfolio in equities. The more of their portfolio that institutional investors are willing to devote to equities, the greater their risk appetite or confidence. “This month, investors continued the pattern established last month, increasing their allocations to risky assets in three of the last four weeks,” commented Froot.
More information on the State Street Investor Confidence Index, including frequently asked questions and a calendar of release dates, is available at www.statestreet.com/investorconfidenceindex .
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