Investor risk appetite increased marginally in July, with the global State Street Investor Confidence Index (ICI) tracking up from 93.3 to 94.
The ICI is based on actual trades made by institutional investors, and measures risk appetite by looking at the allocation to equities. A reading of 100 is neutral – it is the level at which investors are "neither increasing nor decreasing their allocations to risk assets", according to State Street.
The North American ICI fell 0.6 points from June's 93.7 to 93.1, and the European reading dropped by 0.5 points to settle at 101.7.
The Asian ICI remains the most bearish, sitting at 91.
Harvard University professor Kenneth Froot – who developed the ICI with his colleague Paul O'Connell of State Street Associates – said institutional investors were sending a message of caution in July.
"The pick-up in equity buying that we noted last month proved short-lived, and flows had turned negative by the end of our July sample," he said.
The July ICI sample ended just before the latest round of policy pronouncements from European policymakers, Froot added.
"As such, it remains to be seen whether these policy moves will have a meaningful impact on risk appetite," he said.
