The uncertainty over volatile oil prices and the falling loonie have helped push investor sentiment to its lowest level since the 2008-2009 financial crisis, according to a survey released by Toronto-based Manulife Financial Corp.
The firm’s investor sentiment index, based on research compiled in December 2015, is at a level of +16. This is the lowest level since March 2009, when the index sank to +11.
“Canadian investors are facing a long list of uncertainties, including tremendous volatility in both oil prices and the value of the Canadian dollar. The outlook should become more clear over the course of 2016,” says Frances Donald, senior economist, Manulife Asset Management Ltd., through a statement released on Monday.
Investors also shared their thoughts on individual asset classes. Their confidence in mutual funds declined the most, with a drop of eight points in the last six months. Confidence in exchange-traded funds and balanced mutual funds both fell by seven points. The rating for fixed-income products remained the same, at +3.
Canadians are also less optimistic about investing in housing, with that confidence rating dropping by three points within the last year. The two largest drops occurred in British Columbia, which saw a decrease of 13 points since November 2014, and Ontario, which experienced a drop of six points within the same time period.
Overall, investors in Ontario and the Atlantic provinces were the most optimistic and ranked +20 on the current index. Quebec ranked the lowest, at +9, and Alberta was the second-lowest at +14. The Alberta number is a decline of five points since May 2015 and 11 points lower than November 2014.
The index also gauged Canadians’ thoughts on the Bank of Canada’s key interest rate, with 48% believing it will remain at its current level and 77% saying interest rates will not have an impact on their investment strategy.
The firm included a new line of questioning in its most recent index survey, with the goal of gaining insight into Canadians’ online banking use.
Approximately four-fifths (82%) of Canadians use an online channel to manage their finances, with affluent investors (94%) being the group that is most likely to look after their finances through online tools.
Desktop and laptop computers are still by far the most common ways to manage finances online. However, 36% of Canadians use their smartphones when it comes to depositing funds to their accounts. Slightly less than half (47%) feel it is unsafe to bank on their smartphones.
The most common online financial activity for investors is checking the performance of their investments, with 75% doing so at least once a month and 34% doing this weekly.
The Manulife Investor Sentiment Index is a semi-annual measure of investors’ views on a range of asset classes, savings and investment vehicles. It is based on an online survey of 1,001 respondents who were at least 25 years old. Data from affluent respondents was compiled from an online survey of 1,251 respondents who were 25 years old or older, the decision-makers in their household, had a household income of at least $75,000 and investible assets of at least $100,000. Environics Research conducted the research for Manulife in December 2015.