The State Street Investor Confidence Index (ICI) for July 2014 has fallen to 114.7 in July, down 4.6 points from June’s revised reading of 119.3.

The decline was driven by a decrease in North American sentiment from 116.1 to 110.3 and a decrease in Asian sentiment, which fell to 92.1 from 96.2 in June.

“While valuation concerns in the US markets and rising geopolitical risk have dampened sentiment in July, North American confidence still remains relatively upbeat,” said Jessica Donohue, senior managing director and head of research and advisory services, State Street Global Exchange.

“Institutions appear to be in a wait-and-see mode this summer as they contemplate the future path of Federal Reserve monetary policy.”

European sentiment rose to 121.2, up from June’s revised reading of 113.7.

“Stronger growth metrics in Europe and the UK and well received ECB policy actions helped boost European confidence, which reached the strongest level since May of 2007,” added Froot.

“Meanwhile, rising geopolitical tensions may have weakened Asian investor sentiment. It will be interesting to see if continued growth in China and political reform in select Asian countries, including India and Indonesia, lead to stronger sentiment going forward.”

The Investor Confidence Index measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors. A reading of 100 is neutral, the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.

The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.