The home remains the castle for investors: Manulife Investor Sentiment Index
WATERLOO, ON, May 13 2011 – Canadians’ optimism towards investing climbed in the first quarter of 2011, with improved sentiment towards a range of investment types, including stocks, fixed income, investment properties and balanced funds, according to the latest Manulife Investor Sentiment Index.
The Index rose to +28 in March, up from +20 in December, the highest level it’s reached since March 2010, when it was +33. The quarterly survey is conducted by Research House, an Environics Company, for Manulife Financial, Canada’s leading insurance and wealth management company.
All of the Manulife Investor Sentiment Index’s major categories rose indicating a generalized increase in optimism for investors.
“Confidence in investing in your own home has remained consistently high over the last few years, even as real estate prices continue to climb,” said Paul Rooney, President and CEO, Manulife Canada. “But what we’re seeing now is a more widespread optimism, as balanced funds, which provide a mix of investments, jump into second place.”
Manulife provides financial solutions to more than one in five Canadians with a wide range of financial services and products, and its advisors can help investors determine which investment vehicles are the right ones for them, which can be a challenge when all avenues look promising, Rooney said.
“Working with a strong, reliable and trustworthy company such as Manulife to create an integrated financial plan helps people feel more confident about reaching their goals, and can help them navigate through the ups and downs in the economy,” Mr. Rooney said. “We always encourage people to work closely with an advisor and stick to a financial plan.”
The increase in the 49th quarterly Manulife Investor Sentiment Index was mainly driven by more interest in stocks and balanced funds.
The quarterly index tracks Canadians’ sentiment towards investing in 11 different financial 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.
In the 12 years since its launch, the Manulife Investor Sentiment Index never dropped into negative territory overall, even during the depths of the last recession. It peaked at +35 in early 2000, and has an all-time low of +5, recorded in late 2008.
In the most recent survey, all 11 categories covered in the poll gained ground, with the largest increases in the latest survey were registered by balanced funds, mutual funds, TSFAs, and stocks.
Principal residences still remain the most popular investment category at +61, far ahead of the next highest category of balanced funds at +32.
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 a home climbed five points in March to +61. The index reflects that 69 per cent of those surveyed said it’s a good or very good time to invest in their own residence – minus eight per cent who believe it’s a bad or very bad time. The remainder said it was neither a good nor bad time.
- Balanced funds rose in ranking to second-most popular investment targets, almost doubling to +32. The latest index for balanced funds reflects 47 per cent who felt they are a good or very good place to invest, compared to 15 per cent who said the opposite in March.
- Investment real estate rose three points in March, maintaining its lead over cash and fixed income investments. Investment real estate was at +25, still down from +40 a year ago.
- Cash (including savings accounts) tied for fourth place with fixed income investments, at +19, up seven points from the last poll. Since 1999, cash traditionally had been the least preferred means for Canadians to hold their money. But as the economy weakened, the safety of cash became more attractive, marking a sharp rise since late 2008, at the expense of other products deemed more risky.
- Fixed income investments, tied for fourth with cash at +19, rose five points from December.
- Stocks gained 10 points from the last quarterly survey and reflected a more favourable view on equity markets. In the December survey, it came to rest at zero. 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 26 per cent saw equities as a bad or very bad choice. Another 24 per cent felt it’s neither a good nor bad time to buy shares.
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 last year, held the top spot again this quarter, above RRSPs and RESPs. Seventy 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 Retirement Savings Plans remained ahead of RESPs in March at +51 in this latest poll, ahead by five points from December. Some 65 per cent of those surveyed said now is a good time to invest through RRSPs compared to 14 per cent who disagreed.
- Registered Education Savings Plans gained nine points from the previous poll. At +48, the latest results for RESPs reflect 60 per cent of respondents who feel it’s a good or very good time to put money into an RESP, while 12 per cent said they feel it is a bad or very bad time.
- Mutual funds rose 11 points from December, to +25. The latest mutual fund index reflects 43 per cent who say now is a good or very good time to invest in mutual funds, while 18 per cent consider it a bad or very bad time to invest in mutual funds. Another 26 per cent feel it is neither a good or bad time for funds or did not know.
- Segregated remained in last place at +23. They are favoured by 41 per cent of respondents, while 18 per cent feel it is a bad or very bad time to invest in that vehicle
The poll by Research House was conducted with 1,000 Canadians aged 18 and older, between March 22-27, 2011. 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 worldwide 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 around the world. 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 $478 billion (US$492 billion) as at March 31, 2011. 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.