Manulife Investor Sentiment Index rises slightly as investors adjust

Interest eases in real estate; only stocks stay in negative territory

WATERLOO, ON, July 23 2008 – Canadians generally say they kept positive about investing in the past quarter, despite daily news about volatile equity markets, rising gas and food prices plus U.S. sub-prime lending woes, according to a national poll for Manulife Financial, Canada’s leading insurance and wealth management company.

The 38th quarterly Manulife Investor Sentiment Index gained two points to reach +24 in late June, after a five-point drop in the previous quarterly poll in March.

“We’re seeing very consistent responses from Canadians, who suggest they’re adjusting in stride to daily events,” said Paul Rooney, President and CEO, Manulife Canada. “In our latest poll we do see some shifts — in particular toward cash and specific funds, and away from investment real estate. Yet Canadians continue to show strong interest in mutual and segregated funds, with only stocks still in negative territory.”

The survey of 1,000 Canadians by Maritz Research in late June found seven among 10 investment categories and vehicles gained ground from the previous March poll.

“We always encourage investors to work closely with their own advisors, particularly given short-term changes in the economy and markets,” said Mr. Rooney. “That helps them balance their guaranteed versus variable investments, as well as stay focused on their short- and long-term goals.”

Manulife serves more than one in five Canadians with a wide range of financial services and products, “and among our key objectives is to help them make better financial decisions,” added Mr. Rooney. “Depending on their own personal goals, some Canadian investors will naturally adjust to protect or continue to grow their investments.”

The overall index

Since its launch in 1999, the Manulife Investor Sentiment Index has remained in positive territory overall. It peaked at +35 in early 2000, but fell to a low of +11, in December 2001. During the past two years, the index has remained near six-year highs and above +20.

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.

Four of six investment categories gain ground

Real estate was the only investment category to lose ground in the recent survey, with investment property and their principal residences both losing some support from earlier this year.

After rising 12 percentage points in March, investment property registered the strongest drop in June of any category, by falling 11 percentage points. Principal residences kept their place as the most popular investment category – yet support for investing in their own home also eased two percentage points.

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 – a consistent finding since 1999. The index for investing in their own home fell two points in June to +53, after gaining five points in the March survey. 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 12 per cent who believe it’s a bad or very bad time.
  • Fixed income investments (including GICs and annuities) climbed to second place among most popular categories this quarter, rising four points from March. At +28, the index remains high compared to its low of +4 in mid-2004.
  • Balanced funds also rose to third place among the most-popular investment targets, rising eight points to +25. Among those surveyed, 46 per cent felt balanced funds are a good or very good place to invest, compared to 21 per cent who said the opposite in June.
  • Cash (including savings accounts) showed the largest category gain by climbing nine points this quarter to sit at +23. Cash has traditionally been the least favourite among places to put money, but eclipsed both investment real estate and equities in the most recent poll.
  • Investment real estate dropped sharply, from its second-place ranking in March to place fifth among investment categories in June. At +17, investment real estate showed the largest decline in the quarter — after registering the largest gain in March.
  • After marginal gains in the past year, the index for equities actually gained six points in June to sit at -1, the only category in negative territory. The stocks index reflects 31 per cent who said it’s a good or very good time to invest in stocks, either directly or via mutual funds, while 32 per cent saw equities as a bad choice. Another 23 per cent felt it’s neither a good or bad time to buy shares.

Investment Vehicles

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 showed a slight gain one one point in June. At +56, the latest results for RRSPs reflect 68 per cent of respondents who feel it’s a good or very good time to put money into an RRSP, while 12 per cent said they feel it is a bad or very bad time.
  • Registered Education Savings Plans lost five points, to reach +45 in the latest poll. Some 59 per cent of those surveyed said now is a good time to invest, compared to 14 per cent who disagreed.
  • At +22, the index for mutual funds climbed five points from the last quarterly survey, reflecting 43 per cent who said now is a good or very good time to invest in mutual funds, while 21 per cent said it was a bad or very bad time. Another 25 per cent answered that it was neither a good or bad time for funds.
  • Segregated funds also showed a five-point increase in June and tied the popularity of mutual funds to stand at +22.

The poll by Omnitel, a division of Acrobat Research, was conducted with 1,000 Canadians aged 18 and older between June 19 and June 24, 2008. The results have a margin of error of +/- three percentage points, 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$400 billion (US $389 billion) as at March 31, 2008.

Manulife Financial is one of two publicly traded life insurance companies in the world whose rated life insurance subsidiaries hold Standard & Poor’s Rating Services’ highest “AAA” rating.

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.