The ICI index for April rose by 5.5 points to 93.6 from March’s revised reading of 88.1, suggesting the “cautious tone” among institutional investors in March was “short lived”, said Harvard University professor Kenneth Froot.
Driving the increase was a surge in confidence among North American institutions, while confidence among European and Asian institutions declined marginally, according to State Street.
“We observed strong buying of equities globally, especially of Japanese and European equities, and even emerging markets returned to favour, though they still lag behind developed markets in terms of flows,” Mr Froot said.
“While forward-looking growth indicators have softened somewhat, the appetite of institutional investors for holding equities continues to improve.”
In addition, the North American ICI is now at its strongest level since May 2011, said Paul O’Connell of State Street Associates.
“At a sectoral level, flows favour defensive sectors, such as utilities, and this may signal some caution around both the natural resource sector, and global growth prospects more generally,” he added.
The ICI measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors, assigning a precise meaning to changes in investor risk appetite.
