WATERLOO, ON, Jan. 7, 2003 – Canadians’ interest in investing rebounded in all areas and reached its strongest level in 18 months by the end of 2003, according to a recent national poll for Manulife Financial, one of Canada’s leading insurance and wealth management companies.
The 20th quarterly Manulife Investor Sentiment Index, based on a national survey conducted in mid-December, found Canadians were regaining optimism about all types of investments and vehicles, with balanced funds, segregated funds and RESPs leading the way, while real estate remained their overall favourite place to put money.
For the first time in five years since Manulife Financial launched the index, all 10 categories of investments and vehicles gained strength over a previous national poll in September.
The overall Manulife Investor Sentiment Index climbed seven points to +23 in the latest survey, its highest level since mid-2002 and only the second time it reached that level since the 9/11 attacks on the United States.
“More Canadians are seeing positive developments in a range of markets and are keeping their focus on long-term investment goals,” said Bruce Gordon, Manulife Financial’s Executive Vice President and General Manager of Canadian Operations. “Canadians generally continue to favour safe places to invest – particularly their homes, RRSPs, RESPs and investment real estate – while other areas are also gaining support.”
A separate question found most Canadians surveyed (55 per cent) feel they’re in better financial shape than five years ago, when the investor sentiment index was first launched. Another 22 per cent feel they’ve held their financial ground since 1999, while 23 per cent said they feel worse off.
During the past five years, the Manulife Investor Sentiment Index has remained in positive territory overall, despite some moves into negative areas for stocks, particularly after the 9/11 attacks in the United States.
“Generally, Canadians have remained positive about investing, even in some very difficult times, and now we’re seeing renewed strength amid a relatively stable investment climate,” Mr. Gordon noted.
The highest point reached during the past five years was +35, in mid-2000, while the index hit a low of +11 in December 2001.
The overall Winter 2003 Manulife Investor Sentiment Index of +23, based on a survey of 1,002 Canadians by Maritz: Thompson Lightstone, was up from last December’s level of +19. The quarterly index monitors what Canadians say they feel about 10 different investment categories and vehicles. The index reflects the percentage of those surveyed who say they believe it is a good or very good time to invest — minus the percentage who feel the opposite.
“Investors need to work closely with their advisors to assess their short-term needs and long-term objectives, while closely reviewing their guaranteed versus variable investments,” Mr. Gordon added. “Manulife offers a wide range of financial services and products to more than 3.5 million Canadians and the Index helps us gauge what Canadians generally are saying about where they favour investing in the prevailing economy,” Mr. Gordon said.
Balanced funds lead, all others gain ground
Among six investment categories in the quarterly survey, the largest swing since the fall appeared in the index for investing in balanced funds, reflecting renewed strength in equity markets and continuing low interest rates. After a mid-year slowdown in interest in housing, investing in their own homes and investment properties continue to be the two leading investment categories and the most popular places for Canadians to put their money.
The Manulife Investor Sentiment Index is determined by the following six investment categories:
- Investing in their own homes (either through renovations or paying down the mortgage) remains the most popular investment for Canadians, climbing seven points from September’s results to +56. The index reflects 67 per cent of those surveyed who said it’s a good or very good time to invest in their own residence, minus 11 per cent who believe it’s a bad or very bad time.
- Real estate other than their own homes was the next most popular investment, at +37, up six points from September.
- Balanced funds showed a strong gain of 11 points to reach +22, with 44 per cent of those surveyed stating that balanced funds are a good or very good place to invest, compared to 22 per cent who felt the opposite.
- Fixed income investments (including GICs, annuities) rose seven points to +20.
- Renewed stability for stock markets helped to generate a seven point climb in the index for investing in equities, following a 12-point increase in the September survey. At +3, the stocks index remains relatively low, but entered positive territory for the first time since mid-2002. Thirty-six per cent of those surveyed consider it a good or very good time to invest in stocks, either directly or via mutual funds, while 33 per cent view equities as a bad choice. Another 18 per cent felt it’s neither a good or bad time to buy stocks.
- Cash (including savings accounts) registered a slight increase from the September survey, up three points, and remains the least favourite destination for investors. The cash index rose to minus 2, making it the only category in the survey that remains in negative territory.
As well as evaluating the six investment categories above, the same
question was asked of four investment vehicles.
- Registered Education Savings Plans registered the largest increase in the latest poll, climbing 18 points to +51, surpassing RRSPs for the second time in the past year. The index for RESPs reflects 63 per cent who say now is a good time to invest through an RESP, compared to 12 per cent who disagree.
- Registered Retirement Savings Plans continues to be popular – and usually is the most favoured investment vehicle, but were eclipsed by RESPs for the first time last March and again in December. The index for RRSPs gained one point to register +48 in the latest poll. That result reflects 65 per cent of respondents who feel it’s a good or very good time to put money into RRSPs, while 17 per cent said it is a bad or very bad time.
- The index for mutual funds gained eight points to reach +18, mirroring an industrywide return to net sales in recent months. The Manulife poll found 41 per cent of those surveyed said now is a good or very good time to invest in mutual funds, while 23 per cent said it was a bad or very bad time. Thirty-four per cent answered that it was neither a good or bad time for funds, or that they didn’t know.
- Segregated funds showed a strong gain of 14 points to an index of +18, tying mutual funds. In a period of market uncertainty, investors see guarantees offered through segregated funds as a relative benefit compared to mutual funds. About 42 per cent of those surveyed said it’s a good time to invest in segregated funds, compared to 24 per cent stating the opposite.
The poll by Maritz: Thompson Lightstone was conducted with 1,002 Canadians aged 18 and older between December 4 and December 10, 2003. The results have a margin of error of +/- three per cent, 19 times out of 20.
About Manulife Financial
Manulife Financial is a leading Canadian-based financial services group 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 were Cdn$150.8 billion as at September 30, 2003.
Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘0945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.
To view a graph of the Results for the Manulife Investor Sentiment Index, please click here; http://files.newswire.ca/16/Manulife.doc.