In Europe, investor confidence rose 5.0 points from last month to 99.9. Among Asian investors, risk appetite remained stable, and rose 1.4 points from last month to 85.9. By contrast, North American investor confidence dropped 6.3 points to a record low 72.3.
“Globally, institutional investor confidence remains quite weak as institutions continue to reallocate away from equities and into fixed income securities,” commented Froot. “We did note some signs of stabilization in flows in the latter part of this month’s sample, especially with regard to Europe ex-UK markets, but overall the tone remains quite subdued.”
The index, co-developed by Harvard University professor Kenneth Froot and Paul O’Connell of State Street Associates, measures investor confidence and risk appetite by quantitatively analyzing actual trade patterns of institutional investors. A higher reading signifies a higher risk appetite or confidence, with a reading of 100 being neutral.
“The improvement in prospects for the Eurozone region has coincided with an uptick in the risk appetite of European investors, bringing the European Confidence Index back close to the neutral level of 100,” added O’Connell. “However, North American institutional investors are particularly risk-averse at the moment as the focus has shifted from the US presidential election to concerns around the fiscal cliff and the potential for instability in the Middle East.”