Canadians confident in stocks, funds

Losing faith in fixed income and investment properties, investors see relative security in equities and funds

Canadians confident in stocks, funds
Investors are feeling more secure in mutual funds, with confidence levels rising 10% year-on-year to reach 26% in December 2016 — the highest it’s been since 2011. Canadian confidence in stocks and their own homes have also risen, going up to 13% and 45%, respectively.

“When we look at year-over-year results, we're finding that investor confidence is up on nearly all investment vehicles,” said Manulife Senior Investment Strategist Kevin Headland, commenting on the latest Manulife Investor Sentiment Index. “The increased confidence in balanced mutual funds is indicative of investors' needs for growth while balancing their uncertainty in the markets.”

Other investment options experienced declines in confidence. Investment properties dipped slightly to 17%. Cash also slipped to 15%, while fixed income declined to 9%.

Twenty-nine per cent of Canadians think the time isn’t right to purchase a house — a 6% increase from six months ago. The top factors cited were lack of affordable options (68%) and market volatility (31%).

Interest rates may factor into sentiment on affordability, as 77% of Canadians are anticipating mortgage interest rates to rise this year, with renters more likely to predict a considerable hike. Thirty-seven per cent, especially among those from Atlantic Canada and Quebec, believe mortgage rates (both fixed and variable) should be lowered.

Despite these hurdles, 88% of Canadians still consider home ownership a priority, with 82% saying it’s their primary financial goal. But the primary financial goal isn’t the most immediate, it seems, as only 11% who don’t own a home plan to buy one within the next 12 months.

“While home ownership remains a priority, Canadians are not necessarily willing to buy at any cost,” Headland said. With more Canadians walking away from the “buy” option, current conditions favour renting, as 70% of renters intend to continue renting — a 7% increase from six months previous.

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