State Street Global Markets on 11 November 2024 released its institutional investor indicators--which include the and the --for the month of October.
Its risk appetite indicator, which measures investor flows across equities, FX, fixed income, commodity-linked assets, and asset allocation trends, decreased from 0.27 to 0.18, meaning institutional investors were “only modestly less risk-seeking” in October compared to September.
Allocation to equities down; allocations to cash up
State Street’s holdings indicators showed that long-term investor allocations to equities fell back 39bps to 52.7%, said a press release from the firm. Allocations to cash rose by a similar amount (42bps) to reach 19.2% and stayed above the historical average. Fixed income holdings remained fairly stable.
“Long-term investors went into November with their largest allocation to equities ahead of an election in two decades, so they were well-positioned for the initially positive market reaction to the election result,” commented Michael Metcalfe, head of macro strategy at State Global Markets, in the communiqué. “Within equities, long-term investors remain overweight US equities relative to both European equities and emerging market equities, so are well also well prepared for the potential negative implications of US tariffs if they are enacted. Investor holdings of bonds were already at historically low levels, but demand for long-dated treasuries suffered a serious wobble in October with demand across the month falling to a four-year low. With fiscal sustainability gaining more media and market attention, this will be an important behaviour to watch in 2025.”
Calculated every month, State Street’s institutional investor indicators measure risk appetite quantitatively by analysing the buying and selling patterns of institutional investors. The risk appetite index is calculated by measuring investor flows across equities, FX, fixed income, commodity-linked assets and asset allocation trends, explains State Street, while the holdings indicator looks at how investor portfolios are allocated toward equity, fixed income and cash.