Investor confidence is returning, with the US showing the most marked uptick in sentiment, according to a report from State Street Global Markets, State Street’s investment research arm.

The results of the State Street Investor Confidence Index for May show that global investor confidence rose by 3.1 points from April’s reading of 103.2 points. The results showed a strong upsurge in confidence in the US, where the benchmark rose 9.6 points from 95.3 to 104.9.

Among European investors confidence also rose robustly, climbing 7.5 points from 76.8 to 84.3. But in contrast to the US and Europe, the risk appetite of Asian investors had fallen 4.9 points from 98.0 to 93.1.

The State Street Investor Confidence Index measures investor confidence on a quantitative basis by analysing the buying and selling patterns of institutional investors. Underpinning the index’s methodology is the assumption that the more of their portfolio that institutional investors are willing to devote to equities, the greater their risk appetite or confidence. This month, the index has been rebased so that a level of 100 is “neutral”- levels above this therefore indicate that investors are increasing their allocations to risky assets.

“This month’s increase of Global Investor Confidence to 106.3 affirms the return of institutional investors to risk-taking behaviour that occurred last month, after a seven-month hiatus,” said Ken Froot of State Street Associates, State Street Global Markets’ research partnership.

But breaking down this uptick, the attitudes of US diverge markedly from those of their European and Asian counterparts, Mr Froot notes. “While the risk tolerance of North American investors has increased to the point where they are adding to their portfolios of risky assets, the same cannot be said of European and Asian investors, who, while more confident than in past months, remain cautious,” he said.