The Investor Confidence Index (ICI) rose to 106.8 in June, up 11.9 points from May’s revised reading of 94.9.
While the increase was largely driven by an increase in risk appetite among North American investors, State Street said that overall there was a trend toward investors taking “the other side” of price moves.
“The robust increase in the top-line Global ICI number shows that institutional investors took somewhat contrarian positions during the month,” index co-developer and Harvard University professor Kenneth Froot said.
“We witnessed selling of US equities, buying of European equities and significant buying of emerging market equities.
“Overall, our data suggests that institutional investors are content to ‘take the other side’ of these price moves.”
While May saw North American investor confidence fall from a record high result in April, appetite increased again in June, rising 11.9 points to 106.8 over the month.
European confidence increased by 4.7 points to 98.4 and the Asian ICI hit 89.1 from a May reading of 86.0.
State Street noted, however, that as the data sample ends on June 21, the result did not take into account the very recent downturn in equity prices.
“With this month’s increase, both the global ICI and the North American ICI are in ‘accumulate risk’ territory, above the neutral level of 100, and the European ICI is close to that level,” State Street Associates’ Paul O’Connell said.
“While the prospect of an end to quantitative easing in the US has caused a spike in bond yields and a sell-off in equities, institutional investors have viewed this as an opportunity to add equity risk at the expense of bond holdings.
“We will be watching the data closely to see if this is a one-off opportunistic trade, or a more durable valuation-based strategic trade.”
