Manulife Investor Sentiment Index eases as some investors adjust

One third of Canadians surveyed say they've changed their investment style

WATERLOO - Canadians' positive outlook toward investing lost some ground in the past quarter amid concerns about swinging equity markets and U.S. sub-prime lending, according to a national poll for Manulife Financial, Canada's leading insurance and wealth management company.

The 37th quarterly Manulife Investor Sentiment Index remained in strong positive territory, but fell back five points to +22 in March, following a gain of seven points in the previous quarterly poll last December.

"For the past two years the overall index has remained above +20 - running near six-year highs," said Paul Rooney, President and CEO, Manulife Canada. "In our latest poll we're seeing some signs of investors adjusting to the current economic climate, in particular away from equities. Yet they're showing strong interest in real estate and specific funds."

The survey of 1,000 Canadians by Maritz Research in late March found four among 10 investment categories and vehicles gained ground from the previous index reading in December.
"Overall, Canadians appear generally positive about investing and remain focused on their long-term goals," added Mr. Rooney. "Depending on their own personal goals, some Canadian investors will naturally adjust to protect or continue to grow their investments."

Some shift strategy
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Responding to a separate question, almost a third of Canadians (32 per cent) said they recently have changed their investment style (either temporarily or permanently) as a result of current economic conditions, up from 24 per cent in 2004, the last time that question was posed.

Those approaching retirement (older than 50) were most likely to say they have changed their style, with 16 per cent citing a permanent change in their investment style. That's compared to 11 per cent of those between 30 and 49 and only eight per cent of those between 18 and 29 years old who say they've made permanent adjustments.

"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."

The overall index
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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.
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.

Two of six investment categories gain ground
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Real estate showed the most positive responses in the recent survey, as investing in their own home or in investment property both gained ground from late last year.
Investment property registered the strongest gain in support this quarter, by rising 12 percentage points from the previous December survey. Support for investing in their principal residence also rose, climbing five percentage points and continued to remain the most popular investment category.

<< Highlights

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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 gained five points in March to +55, after gaining eight points in the December survey. 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 13 per cent who believe it's a bad or very bad time.

- Investment real estate rebounded sharply in the rankings, up from its fifth-place spot in December to place second in March. At +28, investment real estate showed the largest gain in the quarter -- after registering the largest decline in December.

- Fixed income investments (including GICs and annuities) was a close third place behind investment property among favourite investment destinations this quarter, down eight points from December. At +24, the index remains relatively high compared to its low of +4 in mid-2004.

- Balanced funds fell back from second to fourth place among the most-popular investment targets, down 17 points to +17. Among those surveyed, 44 per cent felt balanced funds are a good or very good place to invest, compared to 27 per cent who said the opposite in March.

- Cash (including savings accounts) lost nine points this quarter to sit at +14. Cash has traditionally been the least favourite among places to put money, but eclipsed equities in the most recent poll.

- After marginal gains in the past year, the index for equities lost 13 points in March to sit at -7, the only category in negative territory. The stocks index reflects 32 per cent who said it's a good or very good time to invest in stocks, either directly or via mutual funds, while 39 per cent saw equities as a bad choice. Another 16 per cent felt it's neither a good or bad time to buy shares.

Investment Vehicles
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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 gained some territory by climbing two points in March. At +55, the latest results for RRSPs reflect 69 per cent of respondents who feel it's a good or very good time to put money into an RRSP, while 14 per cent said they feel it is a bad or very bad time.

- Registered Education Savings Plans gained six points, to reach +50 in the latest poll. Some 65 per cent of those surveyed said now is a good time to invest, compared to 15 per cent who disagreed.

- At +17, the index for mutual funds fell eleven points from the last quarterly survey, reflecting 45 per cent who said now is a good or very good time to invest in mutual funds, while 28 per cent said it was a bad or very bad time. Another 16 per cent answered that it was neither a good or bad time for funds.

- Segregated funds, perhaps the least understood of the investment vehicles, held steady and tied the popularity of mutual funds to stand at +17. >>

The poll by Omnitel, a division of Maritz Research, was conducted with 1,000 Canadians aged 18 and older between March 20 and March 26, 2008. The results have a margin of error of +/- three percentage points, 19 times out of 20.