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Investor Sentiment
Manulife Investment Sentiment Index regains ground to near six-year high
Six of 10 Canadians say they'll enter 2008 financially better off than
five years ago
WATERLOO - Canadians' interest in investments regained ground early this month despite continued concerns about U.S. sub-prime lending and swinging equity markets, according to a national poll for Manulife Financial, Canada's leading insurance and wealth management company.
The 36th quarterly Manulife Investment Sentiment Index gained seven
points to reach +27, after losing 11 points in the previous quarterly poll in
September.
"Canadians overall continue to remain generally positive about long-term
investing, despite news about the dollar, sub-prime lending and other issues,"
said Paul Rooney, President and CEO, Manulife Canada. "We've seen some strong
resilience among investors over the past number of months and the economy
overall remains relatively stable as well."
The survey of 1,000 Canadians by Maritz Research, in late November and
early December, found eight among 10 investment categories and vehicles gained
ground from the previous index reading in September.
"For much of the past two years the overall index had remained above +20
- running near six-year highs," Mr. Rooney added. "In December's poll we're
seeing some signs of renewed optimism in a range of investment areas."
Better off than five years ago
Responding to a separate question, six of 10 Canadians polled said
they're better off now than five years ago, up from 56 per cent a year
earlier. Another 23 per cent said they feel they are in the same financial
position as in 2002, while 16 per cent said they feel they're worse off.
When asked about their financial goals for 2008, those surveyed said
their top priority is to pay down their consumer debts. Twenty per cent chose
overall debts as their top concern, down from 25 per cent a year ago.
Paying down the mortgage ranked second, with 14 per cent choosing to
reduce their mortgage as their top priority. That's identical to a year ago
and just ahead of saving for retirement (10 per cent). Nine per cent said
saving for big-ticket item was their top financial priority for 2008, while
seven per cent said their top concern is ensuring they have enough money if
they become disabled or ill.
The overall index
Since its launch in 1999, the Manulife Investment 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.
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. Rooney 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."
Four of six investment categories gain ground
Fixed income and cash both gained 13 percentage points from the previous
survey, reflecting some general concerns about equity and real estate markets
across North America. Balanced funds gained 12 points.
Among investment categories, investment property and stocks both showed
slight declines, down two and one points respectively. Investing in their own
home gained eight points and still remains the favourite investment
destination cited in the survey.
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Highlights
The Manulife Investment 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 regained eight points points to +50, after losing
14 points in the September survey. The index reflects 63 per cent of
those surveyed who said it's a good or very good time to invest in
their own residence -- minus 13 per cent who believe it's a bad or
very bad time.
- Balanced funds continued to rank second as the most-popular investment
target, up 12 points to +34. Among those surveyed, 50 per cent felt
balanced funds are a good or very good place to invest, compared to
16 per cent who said the opposite.
- Fixed income investments (including GICs and annuities) was a close
third place behind balanced funds among favourite investment
destinations this quarter, up 13 points from September. At +32, the
index remains relatively high compared to its low of +4 in mid-2004.
- Cash (including savings accounts) gained 13 points this quarter to
reach +23. Cash has traditionally been the least favourite among
places to put money, but surpassed investment real estate in the most
recent poll.
- Investment real estate continued to fall in the rankings, from its
traditional third place ranking to fourth in September and now fifth
in the latest poll. At +16, investment real estate showed the largest
drop in the quarter, off two points.
- After marginal gains in the past year, the index for equities lost a
single point in December to sit at +6, the only single-digit category.
The stocks index reflects 34 per cent who said it's a good or very
good time to invest in stocks, either directly or via mutual funds,
while 27 per cent view 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 regained territory by climbing back 11 points in
December. At +53, the latest result reflects 65 per cent of
respondents who feel it's a good or very good time to put money into
RRSPs, while 12 per cent said they feel it is a bad or very bad time.
- Registered Education Savings Plans also gained 11 points, to reach
+44 in the latest poll. Some 58 per cent of those surveyed said now is
a good time to invest, compared to 14 per cent who disagreed.
- At + 28, the index for mutual funds was up seven points from the last
quarterly survey, reflecting 46 per cent who said now is a good or
very good time to invest in mutual funds, while 18 per cent said it
was a bad or very bad time. Another 22 per cent answered that it was
neither a good or bad time for funds.
- Segregated funds, perhaps the least understood of the investment
vehicles, showed a six point increase in the latest poll to stand
at +17.
>>
The poll by Omnitel, a division of Maritz Research, was conducted with
1,000 Canadians aged 18 and older between November 29 and December 4, 2007.
The results have a margin of error of +/- three percentage points, 19 times
out of 20.
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