Fixed income investments gain ground in wake of rising interest rates: Manulife Investor Sentiment Index

WATERLOO, ON, Oct. 8, 2004 – Canadians showed more interest in fixed income investments during the past three months in the face of rising interest rates and volatility in other markets, according to a recent national poll for Manulife Financial, Canada’s leading insurance and wealth management company.

The 23rd quarterly Manulife Investor Sentiment Index, based on a national survey in late September, found more Canadians leaning toward fixed income investments, while balanced funds, real estate and equities faced the largest setbacks. Among 10 categories of investments and vehicles, nine lost ground over the previous poll in June, while interest in fixed income investments rose slightly.

Based on a survey of 1,000 Canadians by Maritz Research, the overall Manulife Investor Sentiment Index declined four points from June to +14 in the latest survey, following a four-point drop the previous quarter.

“Recent shifts in the index are no surprise, since the potential for higher interest rates has been in the news for some time,” said Bruce Gordon, Manulife Financial’s Senior Executive Vice President and General Manager, Canada. “It shows Canadians are sensitive to how interest rates can impact their investments, yet remain focused on their long-term savings.”

Since it was launched five years ago, the Manulife Investor Sentiment Index has remained in positive territory overall — peaking at +35 in early 2000 and marking a low of +11 in December 2001.

The quarterly index monitors what Canadians say they feel about 10 different investment categories and vehicles. The index reflects the percentage of those who say they believe it is a good or very good time to invest — minus the percentage that feels the opposite.

“Over the past six years Canadians have remained positive about investing through some very trying times,” Mr. Gordon noted. “The index generally shows where they lean toward investing, based on the prevailing economy.”

In August, fund industry statistics also showed a shift toward fixed income funds in Canada, with net sales of $424 million for dividend and income funds compared to net redemptions of $250 million for Canadian equity funds.

“Manulife offers a wide range of financial services and products to more than one in five Canadians,” Mr. Gordon added. “Given these changes, investors need to keep working closely with their advisors, on their goals plus the balance between guaranteed versus variable investments.”

Equities, balanced funds lead gains

Among six investment categories measured each quarter, the largest swings appeared for balanced funds, stocks and real estate, since the previous poll in June. Balanced funds were off nine points, while investing in their own homes or investment properties eased for the second straight quarter.


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 place for Canadians to put their money. The real estate index eased to +45, down four points from June. The index reflects 61 per cent of those surveyed who said it’s a good or very good time to invest in their own residence, minus 16 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 +25, down five points from June.

  • Balanced funds declined nine points for the second straight quarter, to +9. Among those surveyed, 36 per cent felt balanced funds are a good or very good place to invest, compared to 27 per cent who said the opposite.

  • Fixed income investments (including GICs and annuities) gained four points, after suffering a drop of seven points in June and a nine-point decline in March. The index for fixed income investments increased to +8, but still ranks behind those shown above.

  • After three straight quarters in positive territory, the index for investing in stocks fell into negative terrain, down six points in June. At -2, the stocks index reflects 31 per cent who said it’s 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 20 per cent felt it’s neither a good or bad time to buy shares.

  • Cash (including savings accounts) registered a four-point decrease and remains among the least favourite destinations for investors. The cash index reached -2, after nudging into positive territory in June.

Investment Vehicles

As well as evaluating the six investment categories above, the same question was asked of four investment vehicles.

  • Registered Retirement Savings Plans continue to be popular – and remained the leading investment vehicle after being eclipsed by RESPs late last year. The index for RRSPs suffered its largest setback in five years, falling 17 points in the latest poll. That result reflects 57 per cent of respondents who feel it’s a good or very good time to put money into RRSPs, while 22 per cent said it is a bad or very bad time.

  • Registered Education Savings Plans registered the largest decrease in the latest poll, falling 20 points to +19. In June, it had eased one point, ranking second among investment vehicles. The index for RESPs reflects 45 per cent who say now is a good time to invest through an RESP, compared to 26 per cent who disagree.

  • The index for mutual funds fell four points to +10. The Manulife poll found 38 per cent of those surveyed said now is a good or very good time to invest in mutual funds, while 28 per cent said it was a bad or very bad time. Eighteen per cent answered that it was neither a good or bad time for funds.

  • Segregated funds eased into negative territory for the first time in two years, by falling 12 points in the latest poll to -1. Thirty-one 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 poll by Maritz Research was conducted with 1,000 Canadians aged 18 and older between September 16 and September 23, 2004. 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 serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and most of Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$360 billion (US$269 billion) as at June 30, 2004.

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