Investors shunning risky assets: State Street
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Rachael Micallef is a journalist with InvestorDaily, a Sterling publication.
Global investor confidence reached record lows in October as investors fled from equities in favour of the safety of fixed income and cash.
According to State Street's latest Investor Confidence Index (ICI), global confidence fell by 6.7 points.
"Globally, institutional investor confidence is at the lowest level it has been since the inception of the ICI in 1998 and this month's reading is 1.5 points below the previous low set in October 2008," State Street Associate Kenneth Froot said.
"Institutional investors continue to display a pronounced, almost secular desire to reallocate away from equities and towards fixed income and cash securities, and this desire has accelerated through the recent market correction."
The ICI gauges investors' risk appetites based on actual trades of institutional investors. A reading of 100 is neutral, where investors are neither increasing nor decreasing their allocations to risky assets.
Across the globe, investors' penchant for risk decreased, with European sentiment falling 10.3 points for the month of October.
North American ICI fell 2.7 points from the September reading and Asian sentiment declined a further 2.9 points, to reach its lowest level since the inception of the index.
The last time global investor confidence was in this range was in 2008, but State Street associate Paul O'Connell said the regional pattern emerging now is very different.
"This shift is reflective of the changed investment outlook, with improved US prospects offset by slowing growth in the Asian region," O'Connell said.
"The net effect is that institutional investors have little appetite for risky assets."