As confidence sinks, fewer feel they are better off financially
BOSTON, Jan. 5, 2016 /PRNewswire/ — After reaching a record high in the second quarter of 2015, investor sentiment flattened out in the year’s final quarter, matching a low last seen in the third quarter of 2013.
The Q4 2015 John Hancock Investor Sentiment Index® dropped by one point to reach +22, down one point from the third quarter of 2015.
The John Hancock Investor Sentiment Index reflects the percentage of investors who say they believe it is a “good” or “very good” time to invest, minus those who feel the opposite.
Global equity market volatility and expectations that in December the Federal Reserve would bring an end to an era of historically low interest rates both appear to have tempered investor optimism. As for world issues that most worry investors, just over half of investors (53 percent) say they are very concerned about unrest in the Middle East.
This finding is significantly higher than one year ago when 41 percent expressed this concern, and is likely due to the recent terror attacks in Paris which occurred while the survey was underway.
Best opportunities lie in Technology & Healthcare
“Confidence in investing in stocks has decreased to 49 percent this quarter from 60 percent one year ago, and we saw a similar decline in optimism toward investing in balanced mutual funds, which incorporate stocks and bonds, a drop to 52 percent from 58 percent one year ago,” noted Megan E. Greene, Chief Economist, John Hancock Asset Management.
“However, two-thirds of investors (66 percent) are still positive about investing in their own homes, and 56 percent are positive about real estate investments in general. Another piece of good news is that investors continue to stay the course with retirement savings, with nearly eight in ten investors saying now is a good time to contribute to 401(k) plans and IRAs.”
The cost of healthcare continues to lead the list of issues that investors worry about the most. Nearly six in ten (58 percent) rank this as their chief concern, up from 55 percent in the third quarter of 2015. Concern about oil and gas prices, which greatly concerned 24 percent of investors in Q2 of 2015, has declined to 13 percent of those surveyed.
Investors believe that technology and healthcare companies will provide the best investment opportunities in the next six months. The largest share of investors (20 percent) think that blue chip stocks will perform the best over the next six months. But in Q4 of last year, 29 percent felt blue chips were the most promising, which suggests that uncertainty has grown over the past 12 months.
The share of investors who say they are in a better financial position now compared with two years ago (44 percent) is significantly lower than in Q4 of 2014 when 50 percent said so, and from 2015’s third quarter when the figure was 52 percent. The share of investors who say they expect to be better off financially two years hence remained the same in Q4 2015 as it was in Q4 of 2014 – 49 percent.
About the John Hancock Investor Sentiment Survey
John Hancock’s Investor Sentiment Survey is a quarterly poll of affluent investors. The survey measures investors’ feelings about the current economic climate and their evaluations of what represents a good or bad investment given the current environment. The poll also asks consumers about their confidence in reaching key financial goals and their attitudes toward specific financial products and services. This online survey was conducted by independent research firm Greenwald & Associates. A total of 1,018 investors were surveyed from November 9th to November 20th, 2015. Respondents were selected from among members of Research Now’s online research panel. To qualify, respondents were required to participate at least to some extent in their household’s financial decision-making process, have a household income of at least $75,000, and assets of $100,000 or more. The data were weighted by age and education to reflect the population of Americans matching the survey’s qualification requirements. In a similarly-sized random sample survey, the margin of error would be plus or minus 3.13 percentage points at the 95 percent confidence level. Due to rounding and missing categories, numbers presented may not always total to 100 percent.
About John Hancock Financial and Manulife
John Hancock Financial is a division of Manulife, a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. Operating as Manulife in Canada and Asia, and primarily as John Hancock in the United States, our group of companies offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Assets under management and administration by Manulife and its subsidiaries were C$888 billion (US$663 billion) as at September 30, 2015. Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘945’ on the SEHK. Manulife can be found on the Internet at manulife.com.
The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock offers and administers a broad range of financial products, including life insurance, annuities, investments, 401(k) plans, long-term care insurance, college savings, and other forms of business insurance. Additional information about John Hancock may be found at johnhancock.com.