Transition to shorter T+2 settlement now underway

Canadian investors’ overall confidence in almost all investment vehicles rose over the past year, according to the most recent edition of Manulife Financial Corp.’s investor sentiment index.

The semi-annual survey, which was released on Monday, takes the pulse of Canadians’ perceptions on a range of asset classes, savings and investment vehicles.

Balanced mutual funds saw the most notable increase, surging by 10% from December 2015 to 26%, their highest level since 2011.

“The increased confidence in balanced mutual funds is indicative of investors’ needs for growth while balancing their uncertainty in the markets,” says Kevin Headland, senior investment strategy at Manulife Financial, in a statement.

Meanwhile, confidence in stocks rose by 13% while confidence in investing through home ownership rose by a significant 45%. There was a small decline in confidence in investment properties at 17%, cash at 15% and fixed-income at 9%.

Manulife’s report notes that Canadians remain cautiously optimistic about their finances, with many survey participants opting for a conservative approach to saving and investing.

Manulife’s investor sentiment index also probed survey participants for their views on the real estate market in their provinces, asking whether the economic conditions are right for purchasing a home.

Although only 29% of survey participants, overall, say it’s a “bad time” to buy a home, the survey results indicate mixed views across the country, depending on the province. For example, 42% of those in British Columbia were most likely to say now is not the best time. In contrast, 38% of survey participants in Alberta think it’s a good time to buy a house.

Of those who feel the conditions aren’t in their favour, 68% cite a lack of affordable options and 31% point to market volatility as the main reasons for holding off on buying a home.

Even as a majority of survey participants (88%) cite home ownership as a primary goal, mortgage interest rates seem to be dampening enthusiasm for diving into that market. About 77% predict an uptick in rates this year.

“While home ownership remains a priority, Canadians are not necessarily willing to buy at any cost,” Headland says. “They are increasingly aware of affordability, whether it is the down payment or monthly payment and interest costs.”

Among those who rent, 70% say they have no plans of ending their lease to buy a home. Renters surveyed were also more likely than homeowners to anticipate an interest rate increase. The survey also found that 60% of homeowners want to lighten their mortgage load in the year ahead.

Environics Research collected the data online in December 2016 from the responses of about 2,000 Canadians over the age of 25 for this survey.

Photo copyright: ashdesign/123RF