The State Street Institutional Investor Indicators provide investors, policymakers, and the public with insights into the aggregated and anonymized positioning, risk appetite, and portfolio carbon exposures of thousands of institutional investors around the world, representing trillions of dollars in assets.
The Holdings Indicator tracks the aggregated portfolio holdings of institutional investors across stocks, bonds, and cash in percentage terms.
- The Institutional Investor Holdings Indicator measures the broad asset allocations of institutional investors to cash, stocks, and bonds
- During times of market stress, cash allocations tend to rise while stock allocations tend to fall
- When short-term interest rates are relatively high, cash holdings tend to rise relative to bonds
- Released monthly
- Cash holdings have now risen more than 6% since their low in March 2022, including a near 1% rise in October. Although cash holdings are now unusually high, they remain significantly below prior crises peaks.
- Equity holdings in particular still look vulnerable to a further leakage to cash as they remain above their historical average even if they are at 29-month low.
- The State Street Risk Appetite index fell to -0.55 from -0.18, showing that, on balance, long-term investors further reduced risk across asset classes in October. This matches the low in risk appetite seen so far this year.
- As markets rally at the beginning of November, we worry that markets risk making a similar mistake to earlier in the year by becoming overly hopeful on the prospects for interest rate cuts against what is still a difficult macro and geopolitical backdrop.
- Fixed Income ex Bills