Despite reports of a cooling Canadian housing market and a slow-growth U.S. economy, a TD study reveals that Canadian investors have great expectations for the next 12 months.
According to the first TD Investor Insights Index, which will serve as a benchmark for future reports on investor sentiment, Canadian investors are optimistic about both their personal investment portfolio and the Canadian economy.
The majority of investors polled expect the Canadian economy will improve or at least stay the same over the next 12 months (26% and 55% respectively). Many investors also expect a great or fair bit of improvement for their investments in the next 12 months (41%) and half think their investments will stay about the same (51%). The study suggests that past market performance could be colouring this bright outlook.
“Canadian investors have a positive view of current market conditions — both domestically and across North America,” said Bob Gorman, Chief Portfolio Strategist, TD Wealth. “While we anticipate moderate growth within the Canadian economy despite little change in key Canadian commodity prices, recent U.S. stock market performance is likely a factor in shaping that positive view.”
The study found that recent portfolio performance has a big influence on expectations. Canadian investors who saw improvements in their personal portfolio over the past 12 months are more likely to expect continued growth over the next year.
Still, the general sense of optimism is apparent even among those who experienced losses. Despite this year’s performance, investors who experienced a loss are still more likely to anticipate improvement than decline.
The positive outlook isn’t limited to personal investments. A strong majority of Canadian investors surveyed expect to see improvement or consistency in the domestic economy, as well as in the United States.
Less rosy, however, is the outlook for the global market. Only 10% of Canadian investors expect improvement for the world economy (42% expect it to worsen, 43% expect it to stay about the same)
“While there is no escaping some degree of market volatility, investors can still find value and good returns with a balanced portfolio. We expect Canadian stocks and U.S. large caps to continue delivering positive returns over the balance of 2013, while companies with steady increases in sales, earnings and dividends outperform the more volatile resource sectors,” added Gorman.
For the study, Head Research was commissioned to conduct a national survey of 1,002 respondents among adult Canadian investors who purchased or sold investments in the past 12 months and who currently own at least one investment product. Fieldwork was conducted between April 8 and 12.