U.S. Investor Confidence Drops 10%: State Street

The Investor Confidence Index was developed by Froot and Paul O’Connell at State Street Associates, State Street Global Exchange’s research and advisory services business. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.

A reading of 100 is neutral and is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index is released on the last Tuesday of each month.

In October, the Global ICI decreased to 114.3, down 2.3 points from September. The decline in investor sentiment was driven by a drop in the North American ICI from 133.2 to 125.5 and a decline of 5.8 points in the European ICI, which fell to 89.9. In contrast, the Asia ICI rose by 13.2 points to 111.0.

“Despite the ongoing uncertainty about the global outlook and dovish comments from the Fed, global institutional investor confidence remains largely positive,” Froot said in late October. “Meanwhile, the increasingly accommodative stance taken by policymakers globally and hopes for state-owned enterprise reforms in China have had a large impact on Asian investors, boosting risk appetite by 13.2 points. This is the first time that the Asia ICI has ascended above the key 100 threshold this year, signaling a more ‘risk on’ climate.”

— Check out 4 Ways Clients Approach Risk: Many Hate It, a Few Love It on ThinkAdvisor.