Balanced funds, mutual funds, stocks and cash near five-year highs
WATERLOO, ON, April 5, 2006 – Canadians’ investment sentiment held steady for the third straight quarter in March, at its highest point in almost five years, according to a national poll for Manulife Financial, Canada’s leading insurance and wealth management company.
The 29th quarterly Manulife Investor Sentiment Index for March remained at +25 – to match its best showing since June 2001, the same level as December and one point above last September’s index. A year ago, the index registered +17.
“Since 2001, investors have witnessed some dramatic changes, but the last three quarters suggest a stable and relatively high level of confidence in long-term savings and investment plans,” said Bruce Gordon, Manulife Financial’s Senior Executive Vice President and General Manager, Canada. “Since this index was launched seven years ago, it’s suggested Canadians are generally committed to investing even through some major international incidents, market swings and more recently higher energy prices.”
The survey of 1,000 Canadians by Maritz Research showed four of 10 categories of investments and vehicles gained ground from the last previous poll in December. Balanced funds, stocks and cash hit five-year highs, while mutual funds are at their highest since mid-2001. Registered Education Plans and real estate registered the largest declines.
The overall index
Since its launch in 1999, the Manulife Investor Sentiment Index has remained in positive territory overall, with a peak of +35 in early 2000 and 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 terrorist attacks in the United States later that year led to a sharp decline in the index.”We’ve seen the index near this level only five times since 2001, including the past three quarters,” Mr. Gordon added. “That indicates some overall relative stability, even if certain areas fall in or out of favour.”
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.
“Manulife offers a wide range of financial services and products to more than one in five Canadians, and among our key objectives is to help them make better financial decisions,” Mr. Gordon 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, as well as stay focused on their long and short-term goals.”
Cash, mutual funds, balanced funds and stocks show gains
Among six investment categories and four vehicles measured each quarter, all remained in positive territory. Four areas rose to five-year highs since December, with cash up 11 points, mutual funds up five, while balanced funds gained four points and stocks were up three.
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 – a consistent finding since 1999. The index for investing in their own home fell nine points in March to +46, off nine points from December. The index reflects 59 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.
Balanced funds climbed to the second most-popular spot, rising four points to +31. Among those surveyed, 47 per cent felt balanced funds are a good or very good place to invest, compared to 16 per cent who said the opposite.
The third most-popular category, investment real estate, eased seven points from the previous survey to +24.
Fixed income investments (including GICs and annuities) eased three points to +23. 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 gaining four points last quarter, the index for stocks gained another three points to reach +14, its highest point in five years. The stocks index reflects 39 per cent who said it’s a good or very good time to invest in stocks, either directly or via mutual funds, while 25 per cent view equities as a bad choice. Another 21 per cent felt it’s neither a good or bad time to buy shares.
Cash (including savings accounts) showed the largest gain this quarter, climbing 11 points to +13 – though it remains the least favourite destination for investments.
As well as evaluating the six investment categories, the same question was asked of four investment vehicles.
Among Canadians’ favourite investment vehicles, Registered RetirementSavings Plans fell back five points in the latest survey, after a 10-point gain in December. The latest result of +51 reflects 66 per cent of respondents who feel it’s a good or very good time to put money into RRSPs, while 15 per cent said it is a bad or very bad time.
After posting the largest increase in December 2004, Registered Education Savings Plans showed the largest decline in March by falling 14 points to +35. Some 54 per cent of those surveyed said now is a good time to invest, compared to 19 per cent who disagree.
The index for mutual funds hit a post-2001 high by gaining five points to +30. The Manulife survey found 49 per cent said now is a good or very good time to invest in mutual funds, while 19 per cent said it was a bad or very bad time. Another 18 per cent answered that it was neither a good or bad time for funds. The last time the mutual fund index reached +30 was in June, 2001, when it registered +35.
Segregated funds fell slightly in March, wiping out a three-point gain in December that had followed six-point gains in both June and September. The seg fund index now stands at +18.
The poll by Maritz Research was conducted with 1,000 Canadians aged 18 and older between March 9 and 14, 2006. 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 groupserving 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 underine management by Manulife Financial and its subsidiaries were Cdn$372 billion (US$319 billion) as at December 31, 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.