RESPs, RRSPs, segregated and balanced funds lead broad gains
WATERLOO, ON, Dec. 20 2006 – Canadians’ interest in investments made its largest leap in more than six years, according to a national poll earlier this month for Manulife Financial, Canada’s leading insurance and wealth management company.
The 32nd quarterly Manulife Investor Sentiment Index jumped 11 points to +34, the largest single quarterly swing since the surveys began in 1999 — and just one point shy of an all-time high of +35 in mid-2000.
“This is a very strong result and likely reflects other economic signs that indicate healthy long-term interest in investing,” said Bruce Gordon, Manulife Financial’s Senior Executive Vice President and General Manager, Canada. “The TSX recently has hit record highs, real estate markets remain active in Canada, and five out of six of our previous polls suggested Canadians are very confident in long-term investing.”
The latest survey of 1,001 Canadians by Maritz Research found all 10 investment categories and vehicles gaining ground from the last national poll in September, as seven categories registered double-digit increases.
“This latest poll suggests consumers remained extremely focused on a broad range of long-term investments,” Mr. Gordon added. “That’s in spite of some concerns about real estate markets in the United States and impact from new tax treatment rules for income trusts here in Canada.”
Better off than five years ago
Responding to a separate question, more than half of Canadians polled said they’re better off now than five years ago (56 per cent), compared to 25 per cent who feel they are in the same financial position. Eighteen per cent said they feel they’re worse off than in 2001.
When asked about their financial goals, those surveyed said their top priority is to pay down their consumer debts. Twenty-five per cent chose overall debts as their top concern, identical to a year ago. Paying down their mortgage ranked second (14 per cent), just ahead of saving for retirement (13 per cent). Ten per cent said their top concern is ensuring they have enough money if they become disabled or ill, while seven per cent said saving to buy a home was their top priority.
The overall index
Since its launch in 1999, the Manulife Investor Sentiment Index has remained in positive territory overall, peaking at +35 in early 2000 and reaching a low of +11 in December 2001.
“For the past six quarters the overall index remained above +20 and that’s generally a good sign,” Mr. Gordon added. “Through much of 2004 and into 2005 we were in softer territory, so we were optimistic about the overall economic picture given other recent measures of consumer confidence in Canada.”
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.
“More than one in five Canadians are served by Manulife’s wide range of financial services and products 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 short- and long-term goals.”
All categories climb and maintain double-digit ratings
All six investment categories and four vehicles measured each quarter neared all-time highs in December – and remained in double-digit positive territory, only the third time since the surveys began in 1999.
Among investment categories, investing in balanced funds, fixed income and their own home showed the strongest gains, up 16, 15 and 14 points respectively. Investment property regained nine points after falling in September, while the index for cash rose seven points. Equities also registered a three-point gain.
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 14 points to +61. The index reflects 70 per cent of those surveyed who said it’s a good or very good time to invest in their own residence — minus nine per cent who believe it’s a bad or very bad time.
Balanced funds continued to rank second as the most-popular investment target, shooting up 16 points to +41. Among those surveyed, 55 per cent felt balanced funds are a good or very good place to invest, compared to 14 per cent who said the opposite.
Fixed income investments (including GICs and annuities) also showed a strong gain in December, jumping 15 points to +38. Fixed income began gaining ground in late 2004 amid speculation of possibly higher interest rates, and continues to remain relatively high compared to its low of +4 in mid-2004.
Investment real estate fell to fourth place in September and remained in fourth this month, despite a nine-point climb from the previous survey to +27.
Cash (including savings accounts) showed a gain this quarter, climbing seven points to +21. Cash continues to vie with equities among the least favourite places to leave money.
After gaining one point in September, the index for equities added another three in December to sit at +15. 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 24 per cent view equities as a bad choice. Almost one quarter (24 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 recovered from a major decline in September and gained 16 points to reach +60. The latest result reflects 71 per cent of respondents who feel it’s a good or very good time to put money into RRSPs, while 11 per cent said they feel it is a bad or very bad time.
Registered Education Savings Plans showed the strongest overall rebound, after falling in September as well. It climbed a dramatic 25 points, following September’s 12 point decline, to also hit to +60 in the latest poll. Some 68 per cent of those surveyed said now is a good time to invest, compared to eight per cent who disagreed.
The index for mutual funds hit a record high in December, by gaining 14 points to +37. The Manulife survey found 52 per cent said now is a good or very good time to invest in mutual funds, while 15 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.
Segregated funds, perhaps the least understood of the investment vehicles, also showed a strong rebound and claimed 18 points, to +28.
The poll by Maritz Research was conducted with 1,001 Canadians aged 18
and older between November 30 and December 6, 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$381 billion (US$341 billion) as at September 30, 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.
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.