State Street Global Exchange today released the results of the State Street Investor Confidence Index (ICI) for August 2014.
The Global ICI rose to 122.8 in August, up 7.2 points from July’s revised reading of 115.6. The improvement in sentiment was driven by an increase in the Asian ICI from 92.1 to 101.7 and a six point increase in the European ICI to 127.7. North American Sentiment fell one point to 110.3.
The Investor Confidence Index was developed by State Street Associates, State Street Global Exchange’s research and advisory services business, and Harvard University professor Kenneth Froot. It measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence.
A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.