Canadian investors have a more bullish outlook for the markets compared to 2013, yet are also more risk averse when it comes to their investment portfolios, according to Franklin Templeton’s 2014 Global Investor Sentiment Survey.
Nearly two-thirds (65 per cent) of Canadian investors think Canada’s stock market will be up in 2014 compared to 60 per cent who thought their market would be up for the year when asked in 2013.
Interestingly, Canadian investors aged 65 and older are most likely to think that the market will increase this year. Globally, 62 per cent of investors believe their local stock market will experience positive performance in 2014.
This positive outlook transcends into investors’ long-term financial view. The overwhelming majority of Canadian investors (81 per cent) are optimistic about reaching their personal financial goals, roughly on par with investors in the U.S. (84 per cent) and globally (80 per cent) who hold this view.
Canadian investors expect higher returns from their investments this year than they did last year, and even higher average returns looking out over the next 10 years. However, they continue to cling to conservative investment strategies, though to a lesser degree than last year.
Specifically, 44 per cent of investors surveyed plan to be more conservative with their investments in 2014, which is double the amount of investors who indicated that they would become more aggressive (22 per cent) — the balance of respondents (34 per cent) don’t plan to make any changes to their investment strategy. Canadians, however, are trending less conservative than investors globally, 52 per cent of whom are planning to adopt a more conservative strategy this year.
“Canadians are living longer, healthier lives than ever before and that means they will need their retirement savings to last longer,” says Philip Bensen, head of National Sales – Canada for Franklin Templeton Investments. “So being overly conservative in such a low interest rate environment raises the possibility that some investors might outlive their retirement savings. Renewed enthusiasm for stocks is encouraging, as many investors will need the higher potential returns that stocks have historically provided over the long term.”
Canadian investors believe stocks, non-metal commodities and property will be the top performing asset classes both in 2014 and over the next 10 years. Looking at stocks in particular, Canadians are more bullish about stocks for this year and in the next decade than they had been in 2013. Canadians are also more likely than their global counterparts to rank stocks as expected top performers.
Next: Home country bias prevails
Home country bias prevails
In Canada, while to a lesser degree than they did in 2013, investors believe that the best opportunities for equity and fixed income returns continue to be in their domestic market. When asked to consider a variety of regions and countries, over a third (35 per cent) of Canadian investors indicated they believe Canada will offer the best equity returns in 2014 and over a fourth (26 per cent) hold that view over the next decade. Looking at fixed income, over a third of Canadian investors believe Canada will have the best returns in 2014 (38 per cent) and over 10 years (35 per cent).
At the same time, Canadian investors are increasing their expectations for U.S. equity and fixed income market performance, compared to their expectations in 2013 — though the large fiscal debt ranked as their chief concern about investing in the U.S. Looking out over the next 10 years, however, Canadians believe Asia will have the best equity market returns globally, but still think Canada will have the best fixed income returns.
Reiterating their home country bias, when given the choice of several asset classes, Canadian investors are most likely to say that they will add or increase investments in equities in their country, with over one-fourth of Canadian investors expecting to add to or increase their investments in domestic equities in 2014.
One of the largest annual surveys of its kind, the 2014 Franklin Templeton Global Investor Sentiment Survey polled 11,113 investors in 22 countries across Africa, Asia Pacific, the Americas and Europe on their current attitudes towards investing and their expectations for 2014 and the decade ahead. Respondents were required to own investible assets, such as stocks, bonds, mutual funds, etc. The survey was completed from January 2 to 15.