WATERLOO, ON, April 3, 2003 – Canadians stepped up their recent search for more secure investments in March, amid mounting concerns leading up to the war in Iraq and a softer RRSP market for mutual funds, according to a recent national poll for Manulife Financial, among Canada’s leading insurance and wealth management companies.
The 17th quarterly Manulife Investor Sentiment Index, conducted in mid-March just before the invasion of Iraq, suggests more Canadians are leaning toward putting money in fixed investments, cash and Registered Education Savings Plans than in late 2002.
Those surveyed were feeling less confident about investing in stocks, mutual funds and balanced mutual funds. Those three categories registered double-digit declines among 10 investment categories and vehicles tracked in the regular poll for the Manulife Investor Sentiment Index. The overall index fell slightly to +16 in March, off from +19 in December.
“The latest survey suggests Canadians are showing strong confidence in their long-term goals, but are clearly leaning toward more secure investments than usual,” said Bruce Gordon, Manulife Financial’s Executive Vice President and General Manager of Canadian Operations. “That’s not a surprise, since four years of our polling shows that most Canadians traditionally favor safer places to invest – particularly their homes, RRSPs, RESPs and investment real estate.”
Recent industry-wide statistics for the mutual fund industry, for example, show rising interest in bond, income and real estate-based funds, while equity-based funds generally registered a decline in net sales through February, Mr. Gordon noted.
The latest survey results largely erased the biggest upward swings in the previous Manulife Investor Sentiment Index in December – which had shown a revival of interest in balanced funds (up 15 points), equities/stocks (up 10 points) and RRSPs (up eight points).
The overall Spring 2003 Manulife Investor Sentiment Index, based on a survey of 1,002 Canadians by Maritz: Thompson Lightstone, reached +16, down three points from December, but remained above last September’s level of +14. The four-year high for the Index was +35 in mid-2000, while its low of +11 was
registered in December 2001, following terrorist attacks in the United States. 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 say it is a bad or very bad time.
“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 economy,” Mr. Gordon said.
“Investors need to work closely with their advisors, who can help them assess their short-term needs and long-term objectives — including a close review of their guaranteed versus variable products,” Mr. Gordon said.
Fixed income and cash gain ground; real estate holds steady
Among six investment categories in the quarterly survey, the index rose for investing in fixed income, reflecting recent slight increases in interest rates. Also cash climbed into positive territory, rising three percentage points to +2. Investing in their own homes and investment properties both held steady from the previous poll, with investing in their own home still the most popular place for Canadians to put their money, at +57. Interest in investment property also held steady at +36.
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. Investing in their own homes remained at +57, after gaining four points in December. The index reflects 70 per cent of those surveyed who said it’s a good or very good time to invest in their own residence, minus 13 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 +36, after climbing two points in the December poll.
- Balanced funds fell sharply by 11 points, registering the largest decline from the last quarterly poll. The index for balanced funds reached +5, with 37 per cent of those surveyed stating that balanced funds are a good or very good place to invest, compared to 32 per cent who felt the opposite.
- Concerns about stock markets drove the index for investing in equities deeper into negative territory, despite a strong rebound from September. The equity index fell 10 points, (after climbing 10 points in the previous quarter) to reach -22 in the latest poll. Some 26 per cent of those surveyed consider it a good or very good time to invest in stocks, either directly or via mutual funds, while 48 per cent said they still view equities as a bad choice. Some 16 per cent felt it was neither a good nor bad time to buy stocks.
- Fixed income investments (including GICs, annuities) rose slightly by three points to +20, reflecting recent changes in interest rates.
- Cash (including savings accounts) climbed by three points, but
remained among the least favourite destinations for investors. The index for cash reached +2, reflecting 40 per cent who said it’s a good or very good time to have money in cash compared to 38 per cent leaning the opposite direction.
As well as evaluating the six investment categories above, the same question was asked of four investment vehicles.
- For the first time in four years, Registered Retirement Savings Plans fell behind RESPs as the most popular investment vehicle, although just slightly, losing five points from the previous survey. The index of +44 for RRSPs in March reflects 64 per cent of respondents who feel it’s a good or very good time to put money into RRSPs, while 20 per cent said it is a bad or very bad time.
- While RRSPs lost favour with some, Registered Education Savings Plans rose by six points to +45. The index for RESPs reflects 61 per cent who favour investing in an RESP, compared to 16 per cent who disagree.
- Segregated funds remained more favorable than mutual funds in March, despite a four-point drop in its index, to +6, erasing a gain in the December poll. In a period of market uncertainty, investors see guarantees offered through segregated funds as a relative benefit, compared to mutual funds. About 38 per cent of those surveyed said it’s a good time to invest in segregated funds, compared to 32 per cent stating the opposite.
- The index for mutual funds fell 10 points to -3, reflecting net redemptions and weaker industry-wide mutual fund sales through February. Some 36 per cent of Canadians polled said now is a good or very good time to invest in mutual funds, while 39 per cent said it was a bad or very bad time.
The poll by Maritz: Thompson Lightstone was conducted with 1,002 Canadians aged 18 and older between March 13 and March 21, 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$146.2 billion as at December 31, 2002.
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.