Poll finds Canadians more optimistic

Canadians are feeling more optimistic about their personal finances and may be willing to move money off of the sidelines again, according to the latest quarterly survey by Manulife Financial.

When asked what they expected their finances to look like six months down the road, 52% expected no change from the present while 32% expect to be better off. Only 14% said they will be worse off at the end of the year.

The Manulife Investor Sentiment Index rose to a reading of +20, which is the percentage difference between positive and negative sentiment — the +20 reading reflects a 60-40 split, favouring optimism.

The prior reading, revealed in March, was +11, up six points for the nadir of sentiment in December 2008.

“We’re seeing some strong signs that Canadians are becoming more optimistic about a range of investing after favouring safer havens over the previous six months,” says Paul Rooney, president and CEO with Manulife Canada. “Canadians seem more interested in real estate, equity, and investment funds after a stretch of gloomy economic news since late last year.”

Among 10 financial asset classes and vehicles, cash was the only one to see a decline in popularity. Canadians took a more favourable view of real estate and stocks in particular.

Sentiment toward investment property climbed 18 points in June, extending a 23 point gain posted in March. While investment realty saw the greatest increase in sentiment, it remains second to the principal residence.

Investing in one’s own home, either by renovation or by paying down mortgage principal was the top choice for Canadians, with a reading of +56 — that is to say, 65% said it was a good time to invest in their home compared to only 9% who said it was not.

While the appeal of holding cash is declining, it remains the third most popular asset with an index reading of +15. Fixed income instruments, including bonds, GICs and annuities were not far behind at a reading of +14.

Sentiment toward balanced funds climbed 11 points to +8, with 36% of respondents favouring them, versus 28% who did not. That leaves a rather large percentage (36%) who had no opinion.

Straight equity investments remain underwater in the minds of investors, although Canadians are less negative than in the recent past. Stocks gained 13 points to a reading of -8, with 29% saying it is a good or very good time to buy them compared to 37% of investors who would not touch them.

In terms of how to hold these assets, planning for the future remained popular. RESPs held the top spot with a reading of +46, with 59% favouring them and 13% not.

The RRSP was second, with a reading of +33, as 53% of respondents said it is a good or very good time to put money into an RRSP, while 20% said it is a bad or very bad time.

Segregated funds beat out mutual funds with a reading of +16 (40% favour, 24% do not favour), compared to a reading of “0” for mutual funds (an even split between those who favour mutual funds and those who do not).

In May, Canadians invested $1.93 billion in net new money in long-term mutual funds and pulled $992.9 million out of money market funds, according to the Investments Funds Institute of Canada. Sales data for is expected to be released July 3.

“We always encourage investors to work with an advisor and stick to a plan so they can stay focused on their goals, plus balance their various types of investments,” Rooney adds.

The poll by Research House was conducted with 1,003 Canadians aged 18 and older between June 17 and 22, 2009. The results have a margin of error of +/- 3.1 percentage points, 19 times out of 20.

(07/02/09)