Investment marketers should note institutional investors’ growing interest in riskier assets, according to new data from State Street.
In its monthly risk appetite barometer – which includes the behaviour of more than a thousand asset managers globally – behaviours showed high demand for high yield investments and a rise in investor allocation to equities – now at the highest level since June 2008.
The indicator is the second major investment indicator to confirm that investors are seeking out riskier assets, following last month’s research from S&P Global, which found US equity investors were becoming increasingly bullish.
By comparison, the behaviour of asset allocators in the State Street survey showed appetite for asset classes that add risk to portfolios more than those that reduce risk.
In a media statement, Michael Metcalfe, head of macro strategy at State Street Global Markets, said investors are “growing in risk appetite”.
He explained: “Out of the 22 measures of risk preference across asset class, in May, 10 were found to be consistent with risk-reducing activities, while 12 were risk seeking.”
The monthly barometer also found that there was now weakening demand for emerging markets and Indian equities, with the latter attributed to the pending election.
Interest in Chinese equities and technology stocks, however, was particularly noteworthy, the research found.
Last month’s S&P Global research concluded that equity investors were responding to signs of “sustained corporate health” despite the higher interest rate environment.