WATERLOO, ON, Dec. 23, 2004 – Canadians are showing more interest in investments across the board as 2004 draws to a close, according to a recent national poll for Manulife Financial, Canada’s leading insurance and wealth management company.
The 24th quarterly Manulife Investor Sentiment Index, based on a national survey in early December, found nine of 10 categories of investments and vehicles gained ground over the previous poll in September. Balanced funds, mutual funds and Registered Education Savings Plans showed the strongest gains among those areas surveyed, while fixed investments remained steady.
Based on a survey of 1,000 Canadians by Maritz Research, the overall Manulife Investor Sentiment Index gained three points from September to +17 in the latest survey, following a four-point drop the previous quarter.
“We’re seeing confidence rebuilding in a number of areas and that’s a good sign as we head into the new year,” said Bruce Gordon, Manulife Financial’s Senior Executive Vice President and General Manager, Canada. “Canadians have shown sensitivity to predictions of possibly higher interest rates in the past six months, but 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.
Better off than five years ago
Responding to a separate question, more than half of Canadians said they are better off than five years ago (53 per cent), compared to 28 per cent who feel they are in the same financial boat. About 18 per cent said they are worse off than in 1999.
Another question about their financial goals found Canadians still focused on paying down their consumer debts. It was named as the top financial priority (named by 21 per cent), while saving for retirement ranked second, named the top priority by 16 per cent of those polled. In third place, paying down the mortgage ranked was cited as their key priority by 12 per cent, compared to saving to buy a home by 10 per cent.
“Canadians have remained positive about investing during the past six years — through some very interesting times,” Mr. Gordon noted.
“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.”
Balanced funds lead gains
Among six investment categories measured each quarter, the largest gains appeared for balanced funds and real estate, since the previous poll in September. Balanced funds gained eight points, while investing in their own homes or investment properties climbed five points.
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 climbed to +50, up five points from September. The index reflects 65 per cent of those surveyed who said it’s a good or very good time to invest in their own residence, minus 15 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 +28, up three points from September.
The third most-popular category, balanced funds, rose eight points to +17 in December. Among those surveyed, 40 per cent felt balanced funds are a good or very good place to invest, compared to 23 per cent who said the opposite.
Fixed income investments (including GICs and annuities) held steady. Fixed income had gained four points in September, amid speculation of higher rates, after a drop of seven points in June and a nine-point decline in March. The index for fixed income investments held at +8.
Despite a one-point gain, the index for stocks remained in negative territory at -1. The stocks index reflects 33 per cent who said it’s a good or very good time to invest in stocks, either directly or via mutual funds, while 34 per cent view equities as a bad choice. Another 16 per cent felt it’s neither a good or bad time to buy shares.
Cash (including savings accounts) registered a three-point increase and also remains among the least favourite destinations for investors. The cash index reached +1.
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. After the RRSP index suffered its largest setback in five years in September – falling 17 points – it regained eight points in early December to reach +43. That result reflects 63 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.
After posting the largest decrease in September, Registered Education Savings Plans registered the largest increase in the latest poll, climbing back 12 points to +31. The index for RESPs reflects 53 per cent who say now is a good time to invest through an RESP, compared to 22 per cent who disagree.
The index for mutual funds climbed 10 points to +20. The Manulife poll found 43 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. Seventeen per cent answered that it was neither a good or bad time for funds.
Segregated funds climbed out of negative territory in December by gaining six points to reach +5. Thirty-three per cent of those surveyed said it’s a good time to invest in segregated funds, compared to 28 per cent stating the opposite.
The poll by Maritz Research was conducted with 1,000 Canadians aged 18 and older between December 9 and December 11, 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$346 billion (US$274 billion) as at September 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 www.manulife.com. www.manulife.com.