WATERLOO, ON, July 17, 2003 – Despite a slight easing in their hot pursuit of real estate, Canadians are keeping up their search for more secure investments, according to a recent national poll for Manulife Financial, among Canada’s leading insurance and wealth management companies.
The 18th quarterly Manulife Investor Sentiment Index, based on a national survey conducted in mid-June, suggests fixed investments, cash and real estate remain among favourite investment destinations this summer, while interest is recovering for mutual funds and equity markets.
Those surveyed showed slightly more confidence about investing in stocks, balanced and mutual funds in June than three months earlier, as those three categories gained ground among 10 investment categories and vehicles tracked in the regular poll for the Manulife Investor Sentiment Index. The overall index eased slightly to +15 in June, off one point from +16 in March.
“The latest survey suggests Canadians clearly continue to lean toward more secure investments, while remaining focused on their long-term goals,” said Bruce Gordon, Manulife Financial’s Executive Vice President and General Manager of Canadian Operations. “Four years of our polling clearly shows most Canadians traditionally favour safe 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 showed a decline in net sales through most of the spring and early summer, Mr. Gordon noted.
The latest survey results indicate a slight decline in interest in investing in real estate, RRSPs and RESPs — although all three categories remain the most popular among Canadian investors.
The overall Summer 2003 Manulife Investor Sentiment Index, based on a survey of 1,001 Canadians by Maritz: Thompson Lightstone, eased one point to +15, 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 feel the opposite.
“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.
“Investors need to work closely with their advisors to closely review their guaranteed versus variable investments, while also assessing their short-term needs and long-term objectives,” 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 stocks and balanced funds, reflecting recent slight changes in interest rates and equity markets. Also cash and segregated funds were among the smallest declines. After a heady spring housing market, investing in their own homes and investment properties both softened compared to the previous quarterly poll, although investing in their own home is still the most popular place for Canadians to put their money.
Highlights
The Manulife Investor Sentiment Index is determined by the following six investment categories:
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Investing in their own homes (either through renovations or paying down the mortgage) remains the most popular investment for Canadians, despite a decline in the latest quarterly survey. Investing in their own homes eased to +49, down eight points from March. The index reflects 62 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.
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Real estate other than their own homes was the next most popular investment, at +29, off seven points from March.
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Balanced funds gained some ground by climbing three points. The index for balanced funds reached +8, with 37 per cent of those surveyed stating that balanced funds are a good or very good place to invest, compared to 29 per cent who felt the opposite.
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Fixed income investments (including GICs, annuities) fell four points to +16, reflecting strength in other markets relative to recent interest rates.
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Cash (including savings accounts) declined slightly, by one point, and remained among the least favourite destinations for investors. The index for cash reached +1, reflecting 37 per cent who said it’s a good or very good time to have money in cash compared to 36 per cent leaning the opposite direction.
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Concerns about stock markets eased slightly as the index for investing in equities showed the largest increase in the last quarterly survey, up six points. It remains in negative territory, however, reaching -16 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 42 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.
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 resumed their lead as the most popular investment vehicle, after being eclipsed by RESPs the previous quarter. The index for RRSPs lost five points to register +39 in June. That result reflects 59 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.
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Registered Education Savings Plans fell by 10 points to +35. The index for RESPs reflects 52 per cent who favour investing in an RESP, compared to 17 per cent who disagree.
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Segregated funds remained more favourable than mutual funds in June, despite a two-point drop in its index, to +4. In a period of market uncertainty, investors see guarantees offered through segregated funds as a relative benefit, compared to mutual funds. About 34 per cent of those surveyed said it’s a good time to invest in segregated funds, compared to 30 per cent stating the opposite.
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The index for mutual funds gained three points to reach 0 in June, reflecting a slight increase despite overall industry-wide net redemptions in mutual funds through May. The Manulife poll found some 33 per cent of Canadians said now is a good or very good time to invest in mutual funds, while 33 per cent said it was a bad or very bad time. The remaining third answered that it was neither a good or bad time for funds, or that they didn’t know.
The poll by Maritz: Thompson Lightstone was conducted with 1,001 Canadians aged 18 and older between June 12 and June 17, 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$141.6 billion as at March 31, 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.
