State Street Investor Confidence Index

DEFINITION of 'State Street Investor Confidence Index '

An index that measures investor confidence by looking at actual levels of risk taken by investors in their portfolios. The State Street Investor Confidence Index reports on the second-last Tuesday of each month, using data it collected at the close of trading on the previous Wednesday. It was codeveloped by Harvard professor Ken Froot and State Street associate director Paul O'Connell.

BREAKING DOWN 'State Street Investor Confidence Index '

It is believed that this approach is more accurate than data collected from surveys of investors and money managers. Using modern portfolio theory to analyze actual portfolios of investors is a more direct approach to analyzing confidence in the financial markets. As investors tend towards riskier assets in their portfolios, it can be assumed that confidence is increasing.