Investors are persistently holding cash, as tracked by State Street, although the firm also noticed a rise in risk appetite in August.

Appetite to take investment risk increased in August, even though investors also added to their cash holdings, a “buffer” against misfortune and part of a trend noted by this news service this year (as shown here and here).

The State Street Risk Appetite Index, put together by State Street, recovered to 0.36 in August from 0.18 in July. This is the third strongest reading of 2026 and a fifth consecutive positive reading. 

The index reading indicates that institutional investors continued to add risk in August following a period of lower risk-asset conviction in the previous month.

“Institutional risk appetite recovered in August from its more moderate July reading. Investor demand for risk assets remains remarkably resilient, recording its fifth successive positive reading,” Dwyfor Evans, head of macro strategy for Asia-Pacific, State Street Markets, said. 

“Portfolio weight allocated to equities fell very modestly in the month but remains close to 25-year highs. The most notable allocation change during the month is out of fixed income and into cash, as concerns around inflation, fiscal policy and rising term premia undermine investor sentiment in bonds. The upshot is that by end-August, equity holdings were 32.5 per cent above bonds against a long-term average of 20 per cent and, somewhat ominously, at levels last seen in the run-up to the global financial crisis in 2008," Evans said.

Evans added that investor allocations showed a continued rise in cash holdings and stood at 17.6 per cent in August.

State Street said its institutional investor indicators (the “three i’s”) measure investor confidence or risk appetite quantitatively by analysing the buying and selling patterns of institutional investors.