Although the State Street Investor Confidence Index is still below 100, indicating institutional investors’ appetite for equities and other risky assets is neutral, the index jumped significantly by 6.7 points to a reading of 96.7 in October -- underscoring marked and continued improvement in institutional investors’ outlook.

The gains in the global index originated in North America and Europe, with the North American Investor Confidence Index increasing 6.6 points to 91.7, and the European Investor Confidence Index gaining 3.4 points to 99.3.

“This month we saw a consolidation of the increase in global investor confidence that we observed last month,” said Harvard University Professor Kenneth Froot, who developed the index with State Street Associates Partner Paul O’Connell. “While this month has seen an ebb and flow of risk appetite on headline news—the general trend has been upwards.

“To some extent, the constructive elements that institutional investors were focusing on in September—including solid corporate balance sheets and the prospects for a resolution of the European debt crisis—have caught the wider imagination this month,” Froot continued.

O’Connell added: “While last month’s improvement in global investor confidence originated in Europe and Asia, this month, we saw the tone among North American institutional investors improve. Looking at the data in more depth, we see that the concerted selling of emerging markets equities that characterized the August and early September periods has abated—and the flows to riskier assets generally are much closer to neutral and cautiously positive in places.”

-- This article first appeared on Money Management Executive.



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