Manulife Investor Sentiment Index rises slightly

September poll up one point from June

WATERLOO, ON, Oct. 12 2010 – After major swings in two earlier polls this year, Canadians seem to be holding their ground in how they view investments in the latest national poll for Manulife Financial, Canada’s leading insurance and wealth management company.

The 47th quarterly Manulife Investor Sentiment Index gained just one point in mid-September and showed stable results across most categories, after sharp changes in two quarterly surveys earlier this year.

The September index edged a single point higher to +26. That follows an eight-point drop in a similar June poll — on the heels of a record leap of 15 points in March, the biggest gain since 1999.

“Given mixed news about global debts, the economy, and other challenges, many Canadians are likely waiting to see where things are headed,” said Paul Rooney, President and CEO, Manulife Canada. “There’s been a grab bag of economic forecasts and hopefully most Canadians are working closely with an advisor to determine where best to make changes to suit their own plans.”

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

In the most recent survey, seven of 11 categories that comprise the index gained some ground.

Previous polls this year showed some sharp swings among Canadians’ investment views. 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.

Seven categories rise

The largest gains in the latest survey were for Registered Education Savings Plans, segregated funds, mutual funds, stocks and investment property.

After some wild swings earlier this year, investment property and investing in equities both gained 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 one point in September to +59. The index reflects 68 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, after a 13 point drop in June, regained three points in September and held its lead over cash and fixed investments. Investment real estate, at +30, still was up from a year ago when it fell to negative territory, which it had seen only twice since the survey began.
  • Balanced funds ranked third among most-popular investment targets, gaining one point. Now at +24, the latest index for balanced funds reflects 41 per cent who felt they are a good or very good place to invest, compared to 17 per cent who said the opposite in September.
  • Fixed income investments held at fourth in the survey, at +19, showing no change from the previous quarter.
  • Cash (including savings accounts) remained above its traditional last place among popular places to put money, at +15, 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 showed a sharp rise since late 2008, as the economy weakened and other products fell out of favour.
  • Equities regained some ground in the latest poll, by gaining three points over the last quarterly survey. In the September survey, it came to rest at +6. 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 25 per cent saw equities as a bad or very bad choice. Another 30 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. Almost two-thirds of those surveyed (65 per cent) said now is a good time to choose a TFSA, compared to only eight per cent who were negative.
  • Among Canadians’ other favourite vehicles, Registered Education Savings Plans gained seven points from the previous poll. At +52, the latest results for RESPs reflect 62 per cent of respondents who feel it’s a good or very good time to put money into an RESP, while 10 per cent said they feel it is a bad or very bad time.
  • Registered Retirement Savings Plans ranked just behind RESPs in September, at +47 in this latest poll, off one point from June. Some 61 per cent of those surveyed said now is a good time to invest through RRSPs compared to 14 per cent who disagreed.
  • Segregated funds gained some popularity this quarter by climbing six points, to reach +25, to keep their lead over mutual funds in the poll. Segregated funds were favoured by 42 per cent of respondents, while 17 per cent leaned the opposite direction.
  • At +20, the index for mutual funds gained four points from June. Mutual funds were hit hard in surveys in late 2008, when the index suffered a 31-point drop. The latest mutual fund index reflects 38 per cent who say now is a good or very good time to invest in mutual funds, while 18 per cent considered it a bad or very bad time to invest in mutual funds. Another 28 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 September 15 and 21, 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$454 billion (US$428 billion) as at June 30, 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.