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Investor confidence sinks to record low
U.S. investors concerned that Fed will raise interest rates too high; Asian investors also bearish, Europe a bright spot.
February 21, 2006: 12:09 PM EST
LONDON (Reuters) - Institutional investors yanked more risk out of their portfolios in February, taking confidence to a record low as North American investors worried about U.S. growth prospects, State Street said Tuesday.
The U.S. financial services firm said its State Street Investor Confidence Index, based on actual fund flows among clients, fell to 73.4 in the month from 77 in January, upwardly revised from 76.
It was the lowest figure since State Street began compiling its index in September 1998.
North American investors showed most caution, although Asian investors also became more bearish. European confidence rose.
State Street's Paul O'Connell, a co-developer of the index, said worries about the economy appeared to be driving U.S. sentiment.
"It seems that our North American institutional investors currently agree more with the outlook of the bond market versus that of the stock market," he said in a statement.
The concern was that the Federal Reserve will raise interest rates so high that it ends up reducing growth, he said.
State Street said the North American index -- which tracks what institutional investors there do globally, not just at home -- hit a low of 85.5 from 89.8 in January, revised up from 88.
The European index rose to 77.9 from 73.7, down from an initial January reading of 76. The Asian index fell to 81.9 from 82.9, upwardly revised from 80.4.
Risk averse
State Street's findings would seem to reflect the differences seen on global equity markets. U.S. stock indexes have lagged European equivalents, while Japan's stock markets are in negative territory for the year.
They are also in harmony with other gauges of investor confidence.
Investment bank Merrill Lynch said last week that investors in its monthly fund manager survey had begun to show signs of caution, raising allocations to safe-haven cash and trimming risk in portfolios.
Reuters asset allocation polls at the end of January also showed investors trimming their heavy allocations in equities and raising cash and bond holdings.
State Street's indexes are based on the actual buying and selling patterns of thousands of institutional investors whose $9.8 trillion in assets State Street administers as custodian.
It also has $1.4 trillion in assets under management.
Investor confidence sinks to record low
U.S. investors concerned that Fed will raise interest rates too high; Asian investors also bearish, Europe a bright spot.
February 21, 2006: 12:09 PM EST
LONDON (Reuters) - Institutional investors yanked more risk out of their portfolios in February, taking confidence to a record low as North American investors worried about U.S. growth prospects, State Street said Tuesday.
The U.S. financial services firm said its State Street Investor Confidence Index, based on actual fund flows among clients, fell to 73.4 in the month from 77 in January, upwardly revised from 76.
It was the lowest figure since State Street began compiling its index in September 1998.
North American investors showed most caution, although Asian investors also became more bearish. European confidence rose.
State Street's Paul O'Connell, a co-developer of the index, said worries about the economy appeared to be driving U.S. sentiment.
"It seems that our North American institutional investors currently agree more with the outlook of the bond market versus that of the stock market," he said in a statement.
The concern was that the Federal Reserve will raise interest rates so high that it ends up reducing growth, he said.
State Street said the North American index -- which tracks what institutional investors there do globally, not just at home -- hit a low of 85.5 from 89.8 in January, revised up from 88.
The European index rose to 77.9 from 73.7, down from an initial January reading of 76. The Asian index fell to 81.9 from 82.9, upwardly revised from 80.4.
Risk averse
State Street's findings would seem to reflect the differences seen on global equity markets. U.S. stock indexes have lagged European equivalents, while Japan's stock markets are in negative territory for the year.
They are also in harmony with other gauges of investor confidence.
Investment bank Merrill Lynch said last week that investors in its monthly fund manager survey had begun to show signs of caution, raising allocations to safe-haven cash and trimming risk in portfolios.
Reuters asset allocation polls at the end of January also showed investors trimming their heavy allocations in equities and raising cash and bond holdings.
State Street's indexes are based on the actual buying and selling patterns of thousands of institutional investors whose $9.8 trillion in assets State Street administers as custodian.
It also has $1.4 trillion in assets under management.
posted by Jones Lang LaSalle NJ News Blog at 4:58 PM
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