Investor Confidence Rises Two Points to 97.2
December 5, 2011
The State Street Investor Confidence Index rose two points in November to 97.2. In North America, the index rose 4.7 points to 95.2, and in Europe, it rose 5.4 points to 101.5. In Asia, however, the index fell 4.2 points to 94.6.
A reading of 100 is neutral, meaning that the institutional investors that the index tracks are neither increasing nor decreasing their allocations to risky assets.
"This month was a case of two steps forward, one step back, as strong reallocations to risk in late October and early November gave way to some pull-back from risky assets in the middle part of November," said Harvard University Professor Kenneth Froot, who developed the index in conjunction with State Street Associates' Paul O'Connell.
"To a large degree, the ebb and flow was driven by persistent doubts about the way forward for European policymakers," Froot said. "At 97.2, Global Investor Confidence is close to its three-year median-signaling that investors are adopting a wait-and-see attitude."
Flight to Safety Drives $176B in Annuity Sales
Wealth accumulation is taking a back seat to another important investor goal: guaranteed retirement income.
The shift in investor focus is driving the growth of annuity sales, which hit a record high of nearly $2.2 trillion in 2010, according to a new report from the Insured Retirement Institute and Cogent Research.
Sales of annuities are on track to break last year's record, which represented a 10% increase from 2009. Third-quarter sales were $57 billion, up 5% from the year-ago period. Year-to-date sales through September were $175.4 billion, up 7.5% from $163.1 billion in 2010.
As a result of recent market volatility, more and more investors are willing to accept lower rates of return to ensure some level of guaranteed retirement income in the future, said Antonio Ferreira, managing director of the wealth management group at Cogent Research.
Nearly one-third of the advisers reported that client requests for annuities increased over the last five years, with nearly seven in 10 having at least one request in the last 12 months.
Mass Affluent Say They Are Not Wealthy
Many mass-affluent investors have not seen their financial situations improve in the past year. They list not saving more toward their 401(k) plans and children's college funds as top regrets, according to Bank of America.
More than half (52%) of the mass-affluent investors with $50,000 to $250,000 in investable assets said their financial situation is the same as it was a year ago. On the other hand, 23% said they have seen an improvement in their financial conditions in the past year-but only because they've changed their behaviors.
Of the respondents surveyed, 35% said they are not wealthy, 25% said they will never be wealthy, 14% said they are wealthy and another 14% said they will be wealthy one day. Thirty-two percent of the respondents cited "not earning enough" as a reason they will not be wealthy, while 23% pointed to the impact the recession has had on their finances.
The report's results come from a phone survey of 1,004 individuals with $50,000 to $249,999 in investable assets from July 20 to Aug. 4. All of the respondents were based in the U.S.