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State Street Launches World’s First Quantitative Investor Confidence Index
State Street launches world's first quantitative investor confidence index
Boston, MA, September 23, 2003 -- State Street Associates, a subsidiary of State Street Corporation (NYSE: STT), the world's leading specialist in meeting the needs of institutional investors, announced today that it has launched the State Street Investor Confidence IndexSM. The index combines a model of global investor behavior with information that tracks the common buying patterns of higher-risk investments by institutional investors around the world.
The monthly index data for September shows investor confidence fell marginally from August, but remains strong compared with the first six months of 2003. In September, the index fell 0.2 points to 103.4 from 103.6 in August, and is still well above the 96.4 average in the first half of the year.
This groundbreaking new measure was developed by Harvard Professor Ken Froot and State Street Associates Director Paul O'Connell, and is based on financial theory that assigns precise meaning to changes in investor risk sentiment, or the willingness of investors to hold proportionally more or less of their portfolio in higher-risk investments. The more of their portfolios that institutional investors are willing to devote to more volatile investments over less volatile investments, the greater their appetite for risk and the greater their confidence.
"Just as consumer confidence surveys aim to determine whether consumers are willing to spend money, our index sheds light on whether or not institutional investors are bullish enough to take on higher risk investments given economic fundamentals and market conditions," O'Connell said.
Because the index is an unbiased quantitative measure of the investment behavior of thousands of institutional investors, it is not directly tied to good or bad news, or to the price of stocks, bonds or other assets. As such, the new index provides a solid and empirical foundation on which to measure investor confidence.
"Until now, information on investor confidence had to be gleaned from surveys, which do not necessarily reflect the underlying trends that help drive investor behavior," said Froot, the Andre R. Jakurski Professor of Business Administration at Harvard University's Graduate School of Business and a senior partner at State Street Associates.
"Now, for the first time, a quantitative index is available to gauge investor confidence and gain insight into the sentiment that underlies the investing environment."
Founded in 1999 in Cambridge, Massachusetts, State Street Associates develops portfolio and flow research, currency management, asset allocation services and designs strategy tools to support the needs of global portfolio managers.
In addition to Froot, the other senior partners of the firm are Mark Kritzman, managing partner, Windham Capital Management Boston, and Stanley W. Shelton, executive vice president, State Street Corporation.
"The State Street Investor Confidence Index underscores our commitment to continually developing leading-edge products and services that can help our clients gain insight into the dynamics shaping global financial markets," said Shelton.
"It was created through a combination of the intellectual capital in State Street Associates and State Street's rich pool of investment assets representing 15% of the world's tradable assets."
The State Street Investor Confidence Index will be published at 10 a.m. Eastern Time in Boston on the second to last Tuesday of each month and released globally.
State Street Corporation (NYSE: STT) is the world's leading specialist in providing institutional global investors with investment servicing, investment management, research and analytics and trading services. With $8.5 trillion in assets under custody and $901 billion in assets under management, State Street operates in 23 countries and more than 100 markets worldwide.
More information on the State Street Investor Confidence Index is available at www.statestreet.com.
This news announcement contains forward-looking statements as defined by United States securities laws, including statements about the financial outlook and business environment. Those statements are based on current expectations and involve a number of risks and uncertainties, including those related to the pace at which State Street adds new clients or at which existing clients use additional services, the value of global and regional financial markets, the pace of cross-border investment activity, changes in interest rates, the pace of worldwide economic growth and rates of inflation, the extent of volatility in currency markets, consolidations among clients and competitors, State Street's business mix, the dynamics of markets State Street serves, and State Street's success at integrating and converting acquisitions into its business. Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in State Street's 2002 annual report and subsequent SEC filings. State Street encourages investors to read the corporation's annual report, particularly the section on factors that may affect financial results, and its subsequent SEC filings for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this press release speak only as of the date hereof, September 23, 2003, and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.
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