Canadians show strongest investing confidence in four years: Manulife Investor Sentiment Index

WATERLOO, ON, Oct. 13, 2005 – Despite rising gas prices and other economic pressures, Canadians pushed investor sentiment to its highest level in more than four years, according to a recent national poll for Manulife Financial, Canada’s leading insurance and wealth management company.

The 27th quarterly Manulife Investor Sentiment Index, based on a survey in mid-September amid rising gas prices following Hurricane Katrina, found nine of 10 categories of investments and vehicles gained ground or held steady for the second straight quarter. Segregated and balanced funds showed the strongest gains while Registered Retirement Savings Plans were the only area that fell slightly.

The survey of 1,002 Canadians by Maritz Research showed the overall Manulife Investor Sentiment Index gained two points to +24 in September, up from June and the highest level since June 2001.

“In contrast to recent consumer confidence surveys, Canadians seem to show some strong resilience toward investing, even amid rising energy prices and energy-related impacts on equity markets in the past month,” said Bruce Gordon, Manulife Financial’s Senior Executive Vice President and General Manager, Canada. “In late 2004, the index reflected sensitivity to predictions of possibly higher interest rates, but investors seem to have shaken that off and remain focused on long-term savings and investment plans.”

Since it was launched in 1999, the Manulife Investor Sentiment Index has
remained in positive territory overall, peaking at +35 in early 2000 and bottoming out at a low of +11 in December 2001. Stock market volatility led to its first major decline in the first half of 2001. Continued stock market woes and the terrorist attacks led to a sharp decline in the index in September, 2001.

“We’ve seen the index near this level only three times since 2001 and
Canadians remain positive about investing, even through some very interesting and sometimes difficult periods,” Mr. Gordon added.

“Manulife offers a wide range of financial services and products to more than one in five Canadians,” he said. “We always encourage investors to work closely with their advisors, particularly given changes in the economy and markets. That helps them to balance guaranteed versus variable investments to work toward their long and short-term goals.”

The quarterly index monitors how Canadians say they feel about investing in 10 different 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 those who feel the opposite.

Balanced funds, investment real estate lead gains

Among six investment categories measured each quarter, all remained in positive territory with balanced funds and cash showing the largest gains since the previous poll in June. Balanced funds rose five points and cash by four, while investing in homes and other property remained relatively steady.

Highlights

The Manulife Investor Sentiment Index is determined by the following six investment categories, shown by order of their overall ranking in the survey.

  • 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 rose to +48, up one point from June. 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 14 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 +32, from the previous survey.

  • The third most-popular category, balanced funds, rose five points to +29. Among those surveyed, 49 per cent felt balanced funds are a good or very good place to invest, compared to 20 per cent who said the opposite.

  • Fixed income investments (including GICs and annuities) rose two points to +21. Fixed income began gaining ground in late 2004, amid speculation of possibly higher interest rates, and continues to remain high compared to its low of +4 in mid-2004.

  • After a seven-point gain last quarter, the index for stocks remained steady at +7. The stocks index reflects 36 per cent who said it’s a good or very good time to invest in stocks, either directly or via mutual funds, while 29 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) gained four points to tie stocks as the least favourite destination for investments, reaching +7 as well.

Investment Vehicles

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

  • Despite showing the only decline this quarter, Registered Retirement Savings Plans continue to be popular – and remained the leading investment vehicle. In September, the RRSP index fell four points to +46. That result reflects 63 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.

  • After posting the largest increase last December, Registered Education Savings Plans again showed gains by climbing two points to +40. The index for RESPs reflects 57 per cent who say now is a good time to invest through an RESP, compared to 17 per cent who disagree.

  • The index for mutual funds also gained three points to +23. The Manulife survey found 46 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. Fifteen per cent answered that it was neither a good or bad time for funds.

  • Segregated funds showed another gain in September, climbing another six points after a similar gain in June. The seg fund index now stands at +18. Forty-two 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 Research was conducted with 1,002 Canadians aged 18 and older between September 15 and 21, 2005. 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 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$364 billion (US$297 billion) as at June 30, 2005.

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.