Investor Sentiment Index Reaches a Record High in First Quarter of 2013
- Positive attitudes toward stocks help drive Index score to +24 in Q1, up from +18 in the fourth quarter of 2012
- Investors think blue chips hold best short-term growth potential; enthusiasm for 401(k) investing is on the rise
- Chief concerns are healthcare costs and political gridlock in Washington, D.C.
BOSTON, April 2, 2013 /PRNewswire/ -- Investor sentiment reached its highest level of the past three years during the first quarter of 2013, according to the John Hancock Investor Sentiment Index®. The Index score shot up six points to +24 in 2013's first quarter from +18 in the final quarter of 2012, largely due to investors' significantly more positive attitudes toward investing in stocks, balanced mutual funds and their own homes. The previous high score was +22, measured in Q1 of 2011. The Index, which debuted in the first quarter of 2011, posted its lowest-ever score in the third quarter of 2011.
Compared with the last three months of 2012, a significantly larger share of investors think that now is a good time to invest in stocks (58 percent vs. 48 percent in Q4 2012). The number of investors who believe now is a good time to invest in balanced mutual funds also increased significantly to 57 percent, compared with 50 percent in Q4 2012. Real estate, including one's own home, also registered positively, with the share citing one's own home as a good investment at 65 percent and real estate at 64 percent, compared with 59 percent for both at the end of 2012. A large segment of investors appear committed to funneling cash to investments, with 64 percent saying it is a bad time to hold on to cash.
"We are seeing a remarkable shift in sentiment on the part of investors," said Bill Cheney, John Hancock's Chief Economist. "They are showing much more optimism about their financial positions overall. More than 70 percent say that 2013 will be a positive year for the average U.S. investor (72 percent), and two-thirds (68 percent) are optimistic that two years from now, the U.S. economy will be stronger. Just about half (48 percent) say their financial position is better now than it was in 2011, which is up significantly from the last two quarters (42 percent in Q4 2012 and 39 percent in Q3 2012). And a nearly identical share believes they will be in a better financial position two years from now (49 percent)."
Investors also say that now is a good time to invest in 401(k) plans (82 percent compared with 73 percent who thought it was a good time in Q4 of 2012), and they are also favorably inclined toward IRAs, with 79 percent saying it is a good time to put money in those plans compared with 72 percent who thought so in Q4 of last year.
When assessing the economy's prospects, nearly a quarter of investors (23 percent) believe that blue chip stocks will perform best over the next six months. One in seven thinks that emerging markets and small cap stocks will perform the best (14 percent each). Investors continue to favor energy companies (50 percent), healthcare companies (48 percent) or technology companies (47 percent) when asked which are likely to provide the best investment opportunity over the next six months.
Concern over many national issues is on the decline, except for concern about the cost of healthcare, according to the Index survey. Investors are very concerned about the cost of healthcare (59 percent, consistent with 58 percent in Q4 of 2012). Nine in ten investors (89 percent) believe that healthcare costs will rise this year, including 29 percent who believe healthcare costs will rise a great deal. More than two-thirds of investors are very or somewhat concerned about being able to afford high quality healthcare (69 percent), with six in ten worried about being able to afford nursing home or long-term care (58 percent).
Worries about political gridlock continue to run high, with 58 percent of investors very concerned about the situation, although the level has decreased from 63 percent in Q4 2012.
Over a third of investors report that they are very concerned about potential changes to Social Security or Medicare (36 percent). More than a quarter of investors express great concern over the effect of significant government budget cuts on business (27 percent); this level is significantly higher than in Q1 of 2012, when it was 22 percent.
The share of investors who are very concerned about oil and gas prices has increased significantly from Q4 of 2012 (now 41 percent versus 34 percent then), but is significantly lower than the same quarter last year (49 percent in Q1 of 2012).
As for their top financial priorities, 42 percent of workers say that saving for retirement is their main focus, while seven in ten retirees (72 percent) say that maintaining their current lifestyle is their top financial priority.
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 likelihood of purchasing financial products and services. This online survey was conducted by independent research firm Mathew Greenwald & Associates. A total of 1,066 investors were surveyed from February 11th to February 22nd, 2013. 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 3.06 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 Financial
John Hancock Financial is a division of Manulife Financial, a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. Operating as Manulife Financial in Canada and Asia, and primarily as John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were C$532 billion (US$535 billion) as at December 31, 2012. Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '945' on the SEHK. Manulife Financial 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, fixed products, mutual funds, 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.
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