July 18, 2001 – The summer 2001 Manulife Investor Sentiment Index edged higher as Canadians take advantage of lower interest rates to invest in real estate and mutual funds, according to a Gallup poll commissioned by Manulife Financial, a leading provider of insurance and investment services.
“Declining interest rates appear to have spurred more interest in both investment real estate and mutual funds this summer,” said Bruce Gordon, Manulife’s Executive Vice President of Canadian Operations. “The mutual fund and housing industries are reporting stronger sales and our index suggests consumers generally are showing a keener interest in both investment real estate and mutual funds.”
Rebound in investor sentiment index
The quarterly index monitors how Canadians say they feel about 10 different investment categories and vehicles. The index for each individual category or vehicle reflects the percentage of those surveyed who say they believe it is a good or very good time to invest, minus the percentage who say it is a bad or very bad time to invest. The summer 2001 Manulife Investor Sentiment Index, based on a mid-June survey of 1,004 Canadians by The Gallup Organization, gained one point to reach +29, after rebounding by four points earlier this year.
“Late last year the index reflected some uncertainty, particularly around equity markets and even real estate late in the year,” said Mr. Gordon. “Now we’re seeing a rebound in interest, particularly in a few key areas that can affect the overall economy.”
Mutual funds, investment real estate gain most ground
Of 10 areas/vehicles of investment, interest in investment real estate showed the strongest index gain in the past three months, while mutual funds showed the sharpest rebound among specific investment vehicles to tie segregated funds at +35.
Despite volatile markets and softer RRSP and mutual fund sales earlier this year, Mr. Gordon said the index could indicate strengthening investor confidence — particularly if Canadians continue to show confidence in real estate and other long-term investments. Of six investment categories measured for the index, investing in their own homes (including mortgages) remained near a previous two-year high, while investment real estate also rebounded sharply.
Highlights
The following six investment categories comprise the Manulife Investor Sentiment Index:
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Investing in their own homes (either renovations or mortgages) hit a record high in March and and remains the most popular investment for Canadians. Traditionally the favourite of six investment categories, investing in their own homes eased two points to an index of +62 in June. The index reflects 70 per cent of those surveyed who said now is a good or very good time to invest in their homes, including paying down their mortgage, minus the eight per cent who believe it’s a bad or very bad time.
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Real estate other than their own homes took over second place among the most popular investments, climbing six points to +33 after shooting up a full 15 points to +27 in March.
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Fixed income investments (including GICs, annuities) remained steady at +33 points, up two points from March.
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Balanced funds fell to fourth among favourite targets for investors, down one point to +30.
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Concerns about stock markets continued in June. Investing in shares was rated at +12 points, its second-lowest point in two years and off sharply from a high of +40 in June, 2000. The latest Manulife/Gallup survey found less than half (38 per cent) said it’s a good time to invest in stocks, either directly or via mutual funds, while 26 per cent surveyed said they saw equities as a bad choice. More than 30 per cent felt it was neither a good or bad time to buy stocks.
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Cash (including savings accounts) barely remained in positive territory after staying out of favour with most Canadians since the index was launched. (Its index was +4 in June).
Investment Vehicles
As well as evaluating the six investment categories above, the same question was asked of four investment vehicles.
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Registered Retirement Savings Plans is the most popular investment vehicle in the Manulife/Gallup survey at +58 points, off four points from March. The index reflects 69 per cent of respondents who feel it’s a good or very good time to put money into RRSPs, while 11 per cent say it’s a bad time.
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Interest in Registered Education Savings Plans eased slightly from its high point in March to +53 points in June.
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The index for segregated funds was deadlocked with mutual funds and reached +35 points.
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Mutual funds rebounded from a low of +28 points in March, reaching +35 in mid-June. Half of Canadians surveyed think mutual funds are attractive now, but 16 per cent say it’s a bad time to place their money in funds.
The survey asked Canadians about their views toward investing in a range of investments and investment vehicles. Gallup polled 1,004 Canadians aged 18 and older between June 14 and June 21, 2001. The results have a margin of error of +/-3%, 19 times out of 20.
About Manulife Financial
Manulife Financial is a leading Canadian-based financial services company operating in 15 countries and territories worldwide. Through its extensive network of employees, agents and distribution partners, Manulife Financial offers clients a diverse range of financial protection products and wealth management services. Funds under management by Manulife Financial (Manulife Financial Corporation and its affiliated companies) were Cdn$124.2 billion as at March 31, 2001.
Manulife Financial Corporation trades as ‘MFC’ on the TSE, NYSE and PSE, and under ‘0945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.
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