State Street Associates has launched a new monthly index that tracks the common buying patterns of higher-risk investments by institutional investors around the world.

The State Street Investor Confidence Index for September shows investor confidence fell marginally from August, but remains strong compared with the first six months of 2003.

In September, the index fell 0.2 points to 103.4 from 103.6 in August, and is still well above the 96.4 average in the first half of the year.

The index was developed by Harvard Professor Ken Froot and State Street Associates director Paul O’Connell, and is based on financial theory that assigns precise meaning to changes in investor risk sentiment, or the willingness of investors to hold proportionally more or less of their portfolio in higher-risk investments. The more of their portfolios that institutional investors are willing to devote to more volatile investments over less volatile investments, the greater their appetite for risk and the greater their confidence.

“Just as consumer confidence surveys aim to determine whether consumers are willing to spend money, our index sheds light on whether or not institutional investors are bullish enough to take on higher risk investments given economic fundamentals and market conditions,” O’Connell said.

Because the index is an unbiased quantitative measure of the investment behavior of thousands of institutional investors, it is not directly tied to good or bad news, or to the price of stocks, bonds or other assets.

“Until now, information on investor confidence had to be gleaned from surveys, which do not necessarily reflect the underlying trends that help drive investor behavior,” said Froot, the Andre R. Jakurski Professor of Business Administration at Harvard University’s Graduate School of Business and a senior partner at State Street Associates.

The State Street Investor Confidence Index will be published at 10:00 Eastern Time in Boston on the second to last Tuesday of each month and released globally.

More information on the index is available at www.statestreet.com/investorconfidenceindex.