Our monthly series offers an updated analysis of our institutional investor indicators.

• Our Institutional Investor Holdings Indicator shows the aggregate holdings of institutional investors across three asset classes: stocks, bonds, and cash. This simple information can tell us a lot about how investors view the economy and markets.
• Our Institutional Investor Risk Appetite Indicator is based on flows — buying and selling activity — rather than portfolio positions. It reveals whether investors, in aggregate, are buying risk or selling it. While the Holdings Indicator tells us about the current location, the Risk Appetite Indicator tells us about the direction of travel.

The State Street Risk Appetite Index surged in April, reversing March’s brief sell-off. Demand for risky assets was strong across all asset classes, leading institutional investors to accumulate elevated exposures.

This increase in risk appetite was most evident in increased allocation to stocks, funded largely from cash — the safest asset class. Equity allocations rose by 2.1 percentage points, more than reversing the prior month’s decline. Such a large monthly increase has been observed only a handful of times in the index’s history dating back to 1998.

Read the commentary by Marija Veitmane, Head of Equity Research, State Street Markets.
The initial de-risking by institutional investors at the onset of the Iran war has proved to be short lived. Despite ongoing hostilities and elevated oil prices, markets are pricing a limited duration, with volatility returning to pre-war levels. At the same time, economic and earnings expectations remain resilient, allowing investors to rebuild risk positions.

Within equities, a strong earnings backdrop continues to support risk taking. Notably, 2026 earnings expectations have risen since the war began, driven by upgrades in energy (higher oil prices) and information technology (IT) (persistent artificial intelligence demand). Investors have moved swiftly to capture these trends, increasing allocations to IT in particular, where earnings visibility remains strong.

Regionally, this has translated into flows into United States' equities, funded by broad-based reduction in positions elsewhere. European equities have seen the heaviest selling as investors reassess profit resilience in a higher oil price environment. The exception is Asian tech-rich indices — Korea and Taiwan — which continue to attract strong demand.

In the foreign exchange (FX) market, the US dollar was the preferred safe-haven choice in March. However, dollar buying has reversed in April with positioning quickly reaching bottom quartile. Instead, investors have rotated into higher beta emerging market (EM) and commodity currencies, while also rebuilding positions in carry trades. Similarly, we are seeing improved demand for EM bonds as well as high yield credit.