West Palm Beach (HedgeCo.net) – State Street Global Markets, the investment research and trading arm of State Street Corporation, released the results of the State Street Investor Confidence Index for October 2008.

Confidence among North American investors fell particularly sharply from a revised level of 75.1 to 50.8. Elsewhere, the declines were less dramatic, with European confidence falling just 1.5 points to 79.6, and Asian confidence declining 0.6 points from 87.1 to 86.5.

“This month we saw a dramatic and unprecedented decline in investor confidence to a new record low, led by investors in North America,” commented Froot. “We saw broad and important reductions of risk across investor portfolios previously at times like the Asian Crisis in 1997 and the Russian-LTCM crisis in 1998. However, even the strong broad-based selling of risk we saw during those events appears small compared with the current outflows. The combination of financial crisis along with truly global macroeconomic risk of deep recession has been causing a complete re-evaluation of risk across a wide investment community centered on US institutional investors.”

Developed through State Street Global Markets’ research partnership, State Street Associates, by Harvard University professor Ken Froot and State Street Associates Director Paul O’Connell, the State Street Investor Confidence Index measures investor confidence on a quantitative basis by analyzing the actual buying and selling patterns of institutional investors.

The index is based on financial theory that assigns precise meaning to changes in investor risk appetite, or the willingness of investors to allocate their portfolios to equities. The more of their portfolio that institutional investors are willing to devote to equities, the greater their risk appetite or confidence.

“When you remember that this measure of investor confidence is not a survey, but rather is based on the actual trades of institutional investors, the readings are particularly striking,” added O’Connell. “The period over which this reallocation was measured in investor portfolios, September 17 to October 15, saw the largest single reallocation away from risky assets that we have witnessed in the data since it first became available in 1994.”

The index is released globally at 10 a.m. Eastern time in Boston on the second to last Tuesday of each month. With $14 trillion in assets under custody and $1.7 trillion in assets under management at September 30, 2008, State Street operates in 26 countries and more than 100 geographic markets worldwide.

Alex Akesson

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Turkish Daily News – Hedge funds, which have reached an estimated asset volume of $2 trillion globally by attracting investor’s interest with their rapidly changing asset allocation and high risk appetite, are about to be accessible to investors in Turkey.

Oyak Securities, Garanti Bank, the Turkish lender co-owned by General Electric Co., and İş Investment are the first institutions that have obtained approval to establish hedge funds since the introduction of the permit in March.

Preparations for the necessary infrastructure are now complete and hedge funds will be available to investors in Turkey this autumn, said Emrah Yücel, fund manager at İş Investment. Fluctuation of global markets for the past year will not have a negative impact on hedge funds, Yücel added, noting that the current economic situation makes such funds even more attractive to investors.

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HONG KONG (Reuters)- As risk appetite for equities and property wanes, investors are willing to endure negative real returns for bonds from China, Singapore and Hong Kong because their economies are seen better equipped to tackle inflation.

Conventionally, bond yields have to be sufficient to compensate investors for their holdings as inflation erodes value over time, but those seeking safe haven destinations are choosing to brave lower returns in some markets.

Bond investors are proving less patient with India, Thailand and the Philippines, markets where yields will continue to rise on worries about fiscal imbalances and authorities’ limited effectiveness in overcoming inflation.

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