Manulife Investor Sentiment Index eases slightly

June poll shaves half of previous record gain

WATERLOO, ON, June 25 2010 – Some Canadians have lost a bit of their optimistic edge from earlier this year, according to a national poll for Manulife Financial, Canada’s leading insurance and wealth management company.

The 46th quarterly Manulife Investor Sentiment Index in mid-June lost just slightly more than half of its record gain in March, when most economic signals pointed upward.

The June index fell back eight points, to +25, after a similar March poll had registered a 15-percentage-point jump and the biggest single increase in more than a decade. Each of 11 categories that comprise the index lost some ground in the most recent survey – just three months after each area recorded gains.

“Some Canadians are likely reacting to more measured news about global debts, the economy, and other challenges,” said Paul Rooney, President and CEO, Manulife Canada. “Given the economic turmoil everyone faced in 2008 and 2009, it’s no surprise that some were hoping to see stronger signs by now of steady job growth and a more robust economy.”

Manulife provides financial solutions to more than one in five Canadians with a wide range of financial services and products, he said, and one of our key goals is to help them make better financial decisions.

“We always encourage people to work closely with an advisor and stick to a financial plan,” Mr. Rooney added. “People with integrated financial plans, working with strong, reliable and trustworthy companies, generally feel better prepared for the future, are more confident about reaching their goals and can deal with the ups and downs in the economy.”

Overall index

After a sharp rise of 15 points in March, the overall Manulife Investment Sentiment Index fell back eight points in June to +25.

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 +11 in December 2001. During the past several years, the index had generally remained near six-year highs, above +20. But the index suffered a sharp drop in late 2008, to reach an all-time low of +5.

The quarterly index monitors how Canadians say they feel about investing in 11 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.

All categories eased

The index survey registered declines in all categories and vehicles, showing the sharpest quarterly drop for stocks, which fell back 15 points after a 23-point jump in March.

After some wild swings earlier this year, investment property and investing in their own homes both eased this quarter. Principal residences still remain the most popular investment category – with a wide lead over every other area.

Highlights

The Manulife Investor Sentiment Index is based on 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 back two points in June to +60. The index reflects 69 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. The remainder was undecided.
  • Investment real estate held its lead over cash and fixed investments, but fell back 13 points in June, to erase its gains in March. Investment real estate, at +27, still was up from a year ago when it fell to negative territory, which it had seen only twice since the survey began.
  • Fixed income investments rose to third in the survey, at +19, after losing eight points from the previous quarter.
  • Balanced funds fell back to fourth place among the most-popular investment targets, losing 8 points since March. Now at +23, the latest index for balanced funds reflects 43 per cent who felt they are a good or very good place to invest, compared to 20 per cent who said the opposite in June.
  • Cash (including savings accounts) and fixed income investments (including GICs and annuities) climbed out of its traditional last place among popular places to put money, at +16, down only one point from the last poll. Over the longer term since 1999, cash traditionally had been the least preferred place named by Canadians to leave their money. Then it recently showed a sharp rise since late 2008, as other products fell out of favour.
  • Equities showed the steepest decline in June, almost wiping out a strong gain in March, but narrowly stayed out of negative territory. In the June survey, it came to rest at +3. 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 28 per cent saw equities as a bad or very bad choice. Another 24 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 five investment vehicles.

  • Tax-free savings accounts, which were added to the survey earlier this year, held the top spot above RRSPs and RESPs. More than six of every 10 Canadians (66 per cent) said now is a good time to choose a TFSA, compared to only 10 per cent who were negative.
  • Registered Retirement Savings Plans ranked just behind TFSAs in June, at +48 in this latest poll, off six points from March. Some 63 per cent of those surveyed said now is a good time to invest through RRSPs compared to 15 per cent who disagreed.
  • Among Canadians’ other favourite vehicles, Registered Education Savings Plans fell four points from the previous poll. At +45, the latest results for RESPs reflect 58 per cent of respondents who feel it’s a good or very good time to put money into an RESP, while 13 per cent said they feel it is a bad or very bad time.
  • Segregated funds lost some popularity this quarter by easing eight points, to reach +19, to keep their lead over mutual funds in the poll. Segregated funds were favoured by 40 per cent of respondents, while 21 per cent leaned the opposite direction.
  • At +16, the index for mutual funds dropped nine points from March. Mutual funds were hit hard in surveys in late 2008, when the index suffered a 31-point drop. The latest mutual fund index reflects 39 per cent who say now is a good or very good time to invest in mutual funds, while 23 per cent considered it a bad or very bad time to invest in mutual funds. Another 23 per cent felt it was neither a good or bad time for funds or did not know.

The poll by Research House was conducted with 1,000 Canadians aged 18 and older, between June 3 and 8, 2010. The results have a margin of error of +/- 3.1 percentage points, 19 times out of 20.

About Manulife Financial

Manulife Financial is a leading Canadian-based financial services group operating in 22 countries and territories worldwide. For more than 120 years, clients have looked to Manulife for strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Our international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. We provide asset management services to institutional customers worldwide as well as reinsurance solutions, specializing in life and property and casualty retrocession. Funds under management by Manulife Financial and its subsidiaries were Cdn$446 billion (US$440 billion) as at March 31, 2010. The Company operates as Manulife Financial in Canada and Asia and primarily as John Hancock in the United States.

Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.