Largest increase in a year reflects strong interest in RESPs, real estate and RRSPs
WATERLOO, ON, July 6, 2006 – Canadians’ investment sentiment registered its largest increase in a year to reach a new five-year high in June, according to a national poll for Manulife Financial, Canada’s leading insurance and wealth management company.
The 30th quarterly Manulife Investor Sentiment Index rose four points to +29 in June. The last time it was that high was exactly five years ago, after holding steady at +25 for the two previous quarters. A year ago, the index registered +22.
“The index for the last five quarters suggests Canadians generally are showing a very stable and relatively high level of confidence in long-term investing,” 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 generally remain unmoved from their long-term goals, despite major international incidents, market swings and more recently higher energy prices.”
The latest survey, of 1,003 Canadians by Maritz Research, shows eight of 10 categories of investments and vehicles gained ground from the last previous poll in March. Balanced funds, segregated funds, mutual funds, fixed income, and registered retirement savings plans all hit new five-year highs. Stocks and cash registered only minor declines.
The overall index
Since its launch in 1999, the Manulife Investor Sentiment Index has remained in positive territory overall, hitting a peak of +35 in early 2000 and a low of +11 in December 2001.
Its first major decline in mid-2001 followed a period of stock market volatility. 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 six times since 2001, including the past five quarters,” Mr. Gordon added. “That suggests we’re in the midst of some strong overall relative stability, regardless of daily market changes.”
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’s wide range of financial services and products serve 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 short-term 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.”
All categories reach double-digit positive territory
All six investment categories and four vehicles measured each quarter reached double-digit, positive territory in June.
Among investment categories, investing in their own home and other real estate both climbed sharply by eight points, while fixed income investments rose by seven points from the March survey. Balanced funds gained a single point while the index for equities eased three points. Cash — the only other category to lose any ground — fell by one point.
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 shot up eight points in June to +54. The index reflects 66 per cent of those surveyed who said it’s a good or very good time to invest in their own residence — minus 12 per cent who believe it’s a bad or very bad time.
After a setback in March, investment real estate climbed back to tie balanced funds as the second most popular investment destination — by rising eight points from the previous survey to +32.
Balanced funds tied for the second most-popular spot, gaining one point to +32. Among those surveyed, 49 per cent felt balanced funds are a good or very good place to invest, compared to 17 per cent who said the opposite.
Fixed income investments (including GICs and annuities) also showed strong gains, rising seven points to +30. 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.
Cash (including savings accounts) showed a slight decline as well this quarter, after climbing 11 points to +13 in March. Now at +12, it continues to vie with equities among the least favourite places to leave money.
After gaining three points last quarter, the index for equities wiped out that gain, to fall back to +11. 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 25 per cent view equities as a bad choice. Another 23 per cent felt it’s neither a good or bad time to buy shares.
As well as evaluating the six investment categories, the same question was asked of four investment vehicles.
Among Canadians’ favourite investment vehicles, Registered Retirement Savings Plans climbed seven points in the latest survey to reach +58. The latest result reflects 68 per cent of respondents who feel it’s a good or very good time to put money into RRSPs, while 10 per cent said they feel it is a bad or very bad time.
Posting the largest overall increase of any category, Registered Education Savings Plans shot up 12 points to +47 in the June survey,
after posting a 14-point drop in March. Some 60 per cent of those
surveyed said now is a good time to invest, compared to 13 per cent
The index for mutual funds hit a post-2001 high by gaining one point to +31. The Manulife survey found 47 per cent said now is a good or very good time to invest in mutual funds, while 16 per cent said it was a bad or very bad time. Another 21 per cent answered that it was neither a good or bad time for funds. The last time the mutual fund index broke through the +30 barrier was in June, 2001, when it registered +35.
Segregated funds also reached a five-year high with a four-point gain in June. The seg fund index now stands at +22, compared to +6 a year ago.
The poll by Maritz Research was conducted with 1,003 Canadians aged 18 and older between June 8 and June 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 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$386 billion (US 330 billion) as at March 31, 2006.
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.
To view Manulife Sentiment Index please click: http://files.newswire.ca/16/Manulife-E.doc Manulife Financial and the block design are registered services marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation.