Investor Confidence Index Falls 6.1 points in February from 92.6 to 86.5

Tuesday, February 28, 2012 8:08 am EST


"This month, institutional investors in the aggregate continued the pattern established late in 2011 of reducing allocations to equities"

State Street Global Markets, the investment research and trading arm of State Street Corporation (NYSE:STT), today released the results of the State Street Investor Confidence Index® (ICI) for February 2012.

Globally, the ICI fell to 86.5, down 6.1 points from January’s revised level of 92.6. The decline was most pronounced among North American investors, whose confidence fell 9.5 points to 80.5, its lowest reading in more than three years. The outlook of European investors, by contrast, improved, with the European ICI rising 4.0 points from January’s revised reading of 91.2 to reach 95.2. In Asia, investor sentiment stayed relatively static, ticking down 0.3 points from a revised January reading of 96.6 to end at 96.3.

The State Street Investor Confidence Index was developed by Harvard University professor Kenneth Froot and Paul O’Connell of State Street Associates. 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 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.

“This month, institutional investors in the aggregate continued the pattern established late in 2011 of reducing allocations to equities,” commented Froot. “Given that equity returns have been positive over the last one and three months, it is clear that these institutions have been ‘liquidity providers’ in the market, comfortable with rebalancing their portfolios at these higher valuations. At the same time, we do note a pro-cyclical bias to the reallocation: institutions are keen to hang on to, or even increase, their holdings of pro-growth sectors such as industrial and consumer discretionary stocks, while cutting back on consumer staples, healthcare and telecom stocks.”

“Across the regions there was a significant divergence this month,” added O’Connell. “The latest round of policy developments in Europe went some way towards lowering the risk of a catastrophic ‘tail event’ crisis, and this improved the mood of European investors. Asian investors held their outlook constant, though we did note that net purchases of Pacific ex-Japan equities by all global investors were relatively robust. It is among US investors that the tendency to sell into the recent market strength was most pronounced.”

About State Street Global Markets

State Street Global Markets provides specialized investment research and trading in foreign exchange, equities, fixed income and derivatives. Its goal is to enhance and preserve portfolio values for asset managers and asset owners. From its unique position at the crossroads of global markets, it creates and unlocks value for its client with original investment behavior research, innovative portfolio strategies, trade process optimization, and global connectivity across multiple asset classes and markets.

State Street Global Markets’ research team of leading academic and industry experts is committed to continually advancing the science, including theory and application of its proprietary investor behavior research and innovative portfolio and risk management technologies.

About the State Street Investor Confidence Index®

The index is released globally at 10 a.m. Eastern time in Boston on the last Tuesday of each month. More information on the State Street Investor Confidence Index is available at

About State Street Corporation

State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $21.8 trillion in assets under custody and administration and $1.9 trillion* in assets under management at December 31, 2011, State Street operates in 29 countries and more than 100 geographic markets. For more information, visit State Street’s web site at

*This AUM includes the assets of the SPDR Gold Trust (approx. $63 billion as of December 31, 2011), for which State Street Global Markets, LLC, an affiliate of State Street Global Advisors serves as the marketing agent.

This news announcement contains forward-looking statements as defined by United States securities laws, including statements about the financial outlook and business environment. Those statements are based on current expectations and involve a number of risks and uncertainties, including those set forth in State Street's 2011 annual report and subsequent SEC filings. State Street encourages investors to read the corporation's annual report, particularly the section on factors that may affect financial results, and its subsequent SEC filings for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this press release speak only as of the date hereof, February 28, 2012, and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.


State Street
Alicia Curran Sweeney, +1 617-664-3001

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