The index gauges investor confidence by analysing the buying and selling patterns of institutional investors. A larger allocation to equities indicates increased confidence or risk appetite.
The increase in sentiment this month was mainly driven by North American institutional investors, with the Investor Confidence Index for North America increasing 12.3 points, from January’s revised figure of 113.2 to 125.5 this month.
Europe experienced a slight drop in confidence, however, with the index falling from 112.8 in January to 110.6 this month.
There was a small improvement in sentiment among Asian investors, with the index rising 3.3 points to 106.6 from the January level of 103.3.
State Street Global Markets vice president Michael Metcalfe said while weaker US economic data and troubles in emerging markets had caused a “dramatic correction in global equities in late January and early February”, longer-term investors did not panic.
“Instead, they used the sell-off in risk assets as a buying opportunity and measured investor sentiment rose in all regions bar Europe,” he said.
State Street Associates director Paul O’Connell said institutions have made significant additions to their equity holdings so far this year.
“This trend has remained intact despite questions about credit tightening in China, the pace of growth in the US and policy upheaval in Turkey, Argentina, Thailand and the Ukraine,” said Mr O’Connell.
“Our data does reveal regional weakness, notably in lacklustre demand for European ex-UK equities, but overall [it] suggests that institutions are adhering to their strategic plans, albeit with a slight defensive tilt to their sector allocation.”
