Investor Confidence Index Declines to 76.0 in January, North American Investors Take Steepest Fall, State Street Reports

State Street Global Markets, the investment research and trading arm of Boston based State Street Corporation, found that investor confidence dipped in January 2005 to 76.0, down from the 2005 performance of 83.8. The confidence of North American institutional investors

By None

State Street Global Markets, the investment research and trading arm of Boston-based State Street Corporation, found that investor confidence dipped in January 2005 to 76.0, down from the 2005 performance of 83.8.

The confidence of North American institutional investors fell to 88.0 in January from a revised reading of 102.1 in December. The European Index increased from 61.0 in December to 76.0 in January, and the Asian Index rose from 75.7 in December to 80.4 this month.

The index was developed by Harvard University professor Ken Froot and State Street director Paul O’Connell. It measures investor confidence on a quantitative basis, analyzing actual buying and selling patterns of institutional investors.

“This month we see strong divergence between the risk appetite of North American institutional investors and their counterparts in Europe and Asia,” O’Connell said. “The confidence of North American investors to bear risk by expanding their holdings of risky assets has hit the lowest level we have recorded to date,” with Asian and European investors left to compensate.

Froot added that while North American risk-taking in equities has slowed steadily over the past three years, the pace of this charge toward diversification may picking up speed. He noted that the “movement by institutional investors toward ‘alpha” is also a movement away from ‘beta.’

«