Fixed income gains popularity

(October 8, 2004) With interest rates on the rise, Canadian investors are showing more interest in fixed income products, according to survey results released by Manulife Financial.

The quarterly Manulife Investor Sentiment Index, which is based on a survey conducted by Maritz Research, shows Canadians are pulling back from real estate, equities and even balanced mutual funds in favour of interest-bearing investments.

In fact, nine out of 10 categories of investments and vehicles lost ground since the last sentiment survey in June. Sentiment rose in fixed income investments alone.

“Recent shifts in the index are no surprise, since the potential for higher interest rates has been in the news for some time,” said Bruce Gordon, Manulife Financial’s senior executive vice-president and general manager, Canada. “It shows Canadians are sensitive to how interest rates can impact their investments, yet remain focused on their long-term savings.”

Shifting sentiment has been backed up by action, as investors moved toward fixed income funds in August, with net sales of $424 million for dividend and income funds compared to net redemptions of $250 million for Canadian equity funds.

While fixed income is the only category to advance, investing in their own home remains the preferred option for Canadians, with 61% still saying it was a good time to invest in the old homestead. Only 16% disagreed.

Non-primary residence real estate was second most popular, followed by balanced funds. Fixed income investments were the fourth most popular investment, while sentiment toward equity investing slipped into negative territory.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com