The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.

A global barometer of the actual buying and selling behaviour of investors by State Street showed they grew less optimistic in October.

The Global Investor Confidence Index decreased to 104.3, down 4.6 points from September’s revised reading of 108.9. The decrease was led by a sharp 14.4-point drop in European ICI to 86.2 as well as a 5.1 point drop North American ICI to 104.0. Asian ICI, meanwhile, rose 4.1 points to 104.5.

“The move was largely driven by weaker sentiment in Europe and US, with the former falling just over 14 points, likely driven by escalating concerns that the European Central Bank may be well behind in the tightening cycle and therefore bring hikes forward. In addition, growing unease around UK fiscal outlook contributed to the volatility across European markets and in turn to the decline in confidence locally,” Rajeev Bhargava, head of Investor Behavior Research, State Street Associates, said. “Interestingly, confidence of Asia investors was more resilient in October as the regional ICI increased over 4 points.”

The index measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.