State Street Unveils “First-of-Their Kind” Allocation Data Tools
Posted by Colin Lambert. Last updated: May 8, 2023
State Street has unveiled three publicly available, data-driven, indicators that the bank says will provide “unprecedented” insight into the aggregate portfolio allocation trends of global institutional investors.
The Institutional Investor Holdings Indicator, Institutional Investor Risk Appetite Indicator, and the State Street S&P Global Institutional Investor Carbon Indicator, (the latter powered by S&P Global Sustainble), will draw on the aggregated and anonymised dataset underlying the assets State Street services to offer investors, as well as other stakeholders. This provides the bank says, “a rigorous, fact-based alternative to unscientific polls and surveys as a means to gauge institutional investor sentiment”.
The three new tools will provide a top-down look into the historically opaque perspective of institutional investors. State Street says they are highly aggregated and anonymised to protect the confidentiality of investors. The indicators will be made available on Insights, the research platform of State Street’s markets business.
The Institutional Investor Holdings Indicator tracks the aggregate holdings of institutional investors across three asset classes: stocks, bonds and cash. Shifts in asset allocations convey information about how investors view the economy and their outlook for markets. The bank explains when investors are bullish on markets, they tend to hold more stocks; when they are bearish, they tend to hold more cash and bonds. The Indicator is calculated daily and will be released monthly.
The second indicators, the Institutional Investor Risk Appetite Indicator, is based on flows rather than portfolio positions. The bank says it reveals whether investors, in aggregate, are buying or selling risky assets. For example, selling less risky bond or stock investments to buy riskier ones would drive up this score. “While the Holdings Indicator tells us about current positioning, the Risk Appetite Indicator tells us about the direction of travel,” the bank states. The Risk Appetite Indicator will also be calculated daily and released monthly.
Finally, the State Street S&P Global Institutional Investor Carbon Indicator tracks the overall exposure of institutional investor portfolio holdings to carbon emissions. Again leveraging aggregated and anonymised custody and accounting data from State Street, together carbon emissions data from S&P Global powered by S&P Global Sustainble, the indicator will show how institutional investors are managing their exposure to carbon risk, and what is driving shifts in these exposures. The Carbon Indicator will be released annually.
“In global markets, understanding how the world’s largest pools of capital are moving can help investors identify headwinds and tailwinds that will impact their portfolios both short and long-term,” says Anthony Bisegna, head of State Street Global Markets. “For two decades, our clients have looked to us for data-driven flow research to help them manage assets. Today, we’re pleased to make these three bellwethers available to the media, policymakers and investors at large.”
Will Kinlaw, head of research at State Street Global Markets, adds, “We have built a market-leading position in macro, quantitative and flow research drawing on our exclusive academic partnerships and data science capabilities. Our clients expect us to provide actionable insights from the collective, aggregated and anonymised data that State Street holds on their behalf.”