VC investments in Canada experience great growth in 2016

Although Canadian investors’ overall confidence in various asset classes has experienced its largest increase in five years, many still prefer the security of cash, according to the most recent edition of Toronto-based Manulife Financial Corp.’s investor sentiment index.

Investors’ overall confidence jumped six points to a rating of 22 in the results released Monday, compared with a rating of 16 points in the previous edition of the survey, published in February.

Confidence in stocks rose to 11 points and that in fixed-income securities went up to 13 points, which is an increase of 10 points for both asset classes. As well, confidence in exchange-traded funds hit an all-time high of four points, taking the asset class out of negative territory.

“As oil prices have rebounded, so has the Canadian equity market and the Canadian dollar. Investor sentiment seems to be feeding off these improvements,” says Philip Petursson, chief investment strategist with Manulife Investments, in a statement.

However, the report notes that Canadians are still cautious about investing amid their growing optimism. Approximately one-quarter (24%) of survey participants say that cash will remain their preferred type of investment over the next 12 months and 19% say they like to have cash on hand when needed.

“Although investor sentiment seems to have improved with the Canadian equity market, the interest in cash may imply that investors are still wary about taking on more risk,” Petursson adds.

Manulife’s investor sentiment index also gauged survey participants’ biggest financial concerns, and Canadians’ desire to manage their current lifestyles came out on top with 27%. The second most popular answer is worry about running out of money in retirement, which hit home for 20% of survey participants.

There was a slight decrease over the past two years in the percentage of Canadians who are worried about the longevity of their retirement funding in addition to entering retirement with debt. Approximately one-third (32%) feel this to be the case in the most recent edition of the survey vs 37% in 2014.

Meanwhile, millennials are a much more optimistic bunch than those who are closer to retirement age. Close to half (40%) of individuals between the ages of 25 and 34 feel their financial situation will improve over that of two years ago compared with 25% of those aged 55 years old or older who believe the same.

Manulife’s investor sentiment index is a semi-annual measure of investors’ views on a range of asset classes, and savings and investment vehicles, as well as their confidence in these areas. Environics Research gathered the data for this edition of the survey in May from the responses of 1,500 Canadians who were 25 years old or older.

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