Marija Veitmane, head of equity research, State Street Markets says: “In June institutional investors continued to add risk to their portfolios, perhaps spurred by falling market volatility. Even though we have seen broad-based buying of risky assets, the largest buildup in risky positions was in asset allocation, equity and commodity asset classes. Institutional investors have increased their allocation to stocks, mostly redeploying cash.
Institutional investors are returning to risk, according to State Street’s latest Institutional Investor Indicators report, which showed its Risk Appetite Index rising to +0.36 in June. The increase marks a significant tilt towards riskier assets, with equity allocations rising 0.7% over the month — surpassing levels at the start of the year.
State Street notes that the rotation into equities was largely funded by a reduction in cash holdings, while bond allocations held steady. Risk-on positioning was most pronounced in asset allocation, equities, and commodities.
