North American institutional investors have lost some confidence this month judging by a slight fall in their appetite for risk measured by putting more equitites in their portfolios.
State Street’s Global Investor Confidence fell by 2.7 points to 70 from February with the North American index slipping by 4.8 points to 59.4. But this is not surprising after a remarkable rebound in confidence or appetite for risk over the last quarter from an all time low of 30.6 in December, says Paul O’Connell of State Street Associates.
At least North American investors were well positioned for the recent equity rally unlike their European counterparts where confidence is still low, he adds.
The difference in confidence levels might just have something to do with the pace of policy response in the two regions. The recent US Fed and Treasury response to the financial crisis has buoyed US investors, says Harvard university professor Ken Froot.
Now the trick will be to judge the next step in the risk game. Risk remains high but investors “must hedge against the sudden switch from hoarding large amounts of cash to dishoarding, ” adds Mr Froot.