Following a bearish May, investor confidence rose in June, according to the State Street Global Investor Confidence Index released Tuesday.

Propelled by a more bullish attitude among North American investors, the Global ICI soared 11.9 points to 106.8, its highest mark since March 2010. The high comes despite indications that the Federal Reserve plans to curtail its quantitative easing policy.

“With this month’s increases, both the Global ICI and the North American ICI are in ‘accumulate risk’ territory, above the neutral level of 100, and the European ICI is close to that level,” State Street Associates managing director and ICI co-developer Paul O’Connell said in a statement. “While the prospect of an end to quantitative easing in the US has caused a spike in bond yields and a sell-off in equities, institutional investors have viewed this as an opportunity to add equity risk at the expense of bond holdings,”

Regionally, the North American ICI increased from 102.6 in May to 114 in June. The European ICI rose to 98.4 from 93.7, and the Asian ICI ticked up 3.1 points to 89.1.

The index, which is released on the last Tuesday of each month, is distinct from survey-based indicators because it measures behavior rather than investor opinions.

The ICI is calculated through an analysis of the transactions of top global investors using a model developed by O’Connell and Harvard professor Kenneth Froot. Combined, the aggregated portfolios measured account for about 15% of all investable securities. By charting what investors are buying and selling, the ICI gauges their confidence. The more investors turn to equities, for example, the more comfortable they are with risk. A shift towards bonds, in turn, signals less confidence.

“The robust increase in the top-line Global ICI number shows that institutional investors took somewhat contrarian positions during the month,” said Froot. “We witnessed selling of US equities, buying of European equities, and significant buying of Emerging Markets equities. These reallocations run counter to price movements over the period, though it should be noted that our data sample ends on June 21st and hence does not cover the most recent downturn in equity prices. Overall, our data suggest that institutional investors are content to ‘take the other side’ of these price moves.”

The ICI is compiled by the Boston-based investment and trading research firm State Street Global Markets, which is a division of State Street Corporation.

Though the spike in confidence is a welcome sign, O’Connell and Froot have not yet concluded that it indicates the start of a sustained trend.

“We will be watching the data closely to see if this is a one-off opportunistic trade,” O’Connell said, “or a more durable valuation-based strategic trade."

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