State Street's global investor confidence index rose by 0.9 points to 108.7 in September from August's revised 107.8.

The index rose by a rather large 11.5 points in August, showing an ongoing significant improvement in risk appetite.

An index above the 100 neutral level shows investors chose to put on risk, and the ICI is now up for nine straight months.

Investor confidence rose in two of three major regions, led by a 11.0 point rise to 112.6 in Asia. The North American ICI rose 0.8 to 104.7. The European ICI declined 6.2 points to 97.5.

Separately, effective October 25, 2023, State Street said it is retiring its Investor Confidence Index and will rely instead on its new Institutional Investor Holdings and Risk Appetite Indicators.

State Street said the two new indicators, launched in May 2023, draw on the aggregated and anonymized dataset underlying the assets that State Street services to provide insights into how investors are positioned and where their assets are flowing.

The State Street Investor Confidence Index measures confidence by looking at actual levels of risk in investment portfolios. This is not an attitude survey. The State Street Investor Confidence Index measures confidence directly by assessing the changes in investor holdings of equities. The more of their portfolio that institutional investors are willing to invest in equities, the greater their confidence. The report's main index is global and is based on activity in 45 countries. The report tracks more than 22 million transactions annually. There are three published components: North America, Europe and Asia-Pacific. The separate weightings of the three components vary month to month based on investment activity and are not published. Also included in the global index, but also not published, is activity in South America and the Middle East.

Conventional wisdom suggests investors are confident when stocks are rising and pessimistic when falling. But in fact, the State Street group notes prices tend to be higher when economic fundamentals are strong; i.e., when economic indicators are growing at a healthy clip. But a good investor confidence measure"should indicate whether, for a given set of fundamentals, investors are bullish or bearish on risky assets." State Street believes direct measurement, rather than a survey of portfolio managers who often don't have time to fill out monthly questionnaires, is a more reliable approach to sentiment assessment. The investor confidence index is compiled with techniques based on modern portfolio theory. According to State Street,"the more of their portfolios that professional investors are willing to devote to riskier as opposed to safer investments, the greater their risk appetite or confidence." So when investors choose to increase their holdings of risky assets, this confirms their confidence has increased. Incidentally, State Street believes investor confidence can exist in a bear market as well as a bull market. Since market players have become so enamored with consumer attitude surveys, it probably would be useful for both professional portfolio managers and amateur investors to consider investor attitudes.