-- Canadian investors look across US border for equity returns in 2015 --
TORONTO, May 20, 2015 /CNW/ - Canadian investors are more optimistic about reaching their financial goals (85 per cent) than last year (81 per cent), even though almost half (45 per cent) are concerned about the state of the global economy and around one-third (37 per cent) are worried about falling oil prices. Although expectations for Canadian stock market returns have decreased 12 per cent since last year, more than half (53 per cent) of Canadian investors still expect positive returns in 2015.
In its fifth year canvassing investors across the globe, the 2015 Franklin Templeton Global Investor Sentiment Survey found that more than half (58 per cent) of the 11,500 investors surveyed in 23 countries across the Americas, Africa, Asia Pacific and Europe believe their local stock market will post positive returns in 2015. Whereas, 64 per cent of North American investors believe their local stock market returns will be positive this year.
"Investors have experienced a tough few quarters in the equity markets, especially in Canada where energy represents about a quarter of the market," said Ronice Barlow, senior vice president, Franklin Templeton Investments. "This highlights the importance of seeking professional advice to help Canadian investors ensure they diversify their portfolio across asset classes that reflect their risk tolerance."
Canadians looking across the border for equity returns
In Canada, nearly twice as many investors think the US equity market will offer the best returns this year compared to 2014 (47 per cent versus 24 per cent, respectively).
"With US equity markets up 13.7* per cent in 2014, Canadian investors are tempted to chase one of last year's top performing asset classes, which can be a dangerous game," said Stephen Lingard, senior vice president and portfolio manager, Franklin Templeton Solutions. "Our portfolio team is focusing on valuations and corporate earnings growth outside of North America, specifically abroad in Europe and Asia as these markets are looking favourable."
On the other hand, almost three-quarters (74 per cent) of American investors have a home country equity bias in 2015. Although only a quarter (24 per cent) of Canadians think that their own market has the best equity opportunities, which is 11 per cent fewer Canadians than last year (24 per cent in 2015 versus 35 per cent in 2014).
Looking longer term, American investors have a home country bias over the next 10 years, with 60 per cent choosing the US as the best place to invest their equity holdings and 64 per cent choosing US fixed income investments over investing in other markets. Whereas, 26 per cent of Canadian investors choose their own country for equity investments and 31 per cent chose Canadian fixed income investments over the next decade.
Stocks remain in favour while global economy looms
Canadian investors believe stocks, real estate and precious metals will be the top performing asset classes in 2015 and over the next 10 years. There is a considerable drop in the number of investors who think non-metal commodities will perform best this year (8 per cent) compared to 2014 (13 per cent).
"The recent volatility in energy and the Canadian dollar is causing investors to evaluate their portfolio holdings," said Lingard. "Investors would do well not to panic about short-term volatility and rather focus on longer-term asset allocation strategies to help deliver strong investment outcomes and risk-adjusted returns."
While Canadian investors remain optimistic about future stock market returns, expectations for the year ahead have decreased. Globally, stocks are clearly viewed as providing the best potential returns both in the near term and long term.
Security, quality of life influence investing goals
Retirement is number one in the top three investment goals for Canadian investors with 70 per cent choosing it, and 75 per cent of Americans also ranking it at the top. Planning for a vacation (52 per cent) and for emergencies (40 per cent) follow in the top three investment goals for Canadian investors. In Europe, almost half (49 per cent) of investors placed the highest priority on planning a vacation.
Notably, Canadian investors aged 25 - 34 are more likely to rank purchasing a new home and investing in or starting a business among their top three goals than those 45 and older.
The Franklin Templeton Global Investor Sentiment Survey, conducted by ORC International, included responses from 11,508 individuals in 23 countries: Brazil, Chile and Mexico in Latin America; Australia, China, Hong Kong, India, Japan, Malaysia, South Korea and Singapore in Asia; France, Germany, Greece, Italy, Poland, Spain, Sweden and the UK in Europe; South Africa and the UAE in the Middle East and Africa; and the United States and Canada in North America. Survey respondents were between the ages of 25 and 65 in Latin America, Asia (except for Japan) and South Africa and 25 and older in Europe, Japan, the UAE, Canada and the US. Respondents were required to own investable assets, such as stocks, bonds, mutual funds, etc. In addition, a minimum investable asset threshold was set for each country to ensure that the respondent had sufficient investments, providing a knowledge base from which to answer the survey questions. The survey was completed from February 12 to March 2, 2015, in all countries.
About Franklin Templeton Investments
Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 150 countries. Through specialized teams, the company has expertise across all asset classes—including equity, fixed income, alternative and custom solutions. The company's more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in 35 countries, the California–based company has more than 65 years of investment experience and over US$894 billion (over C$1,079 billion) in assets under management as of April 30, 2015.
For more information, please visit franklintempleton.ca or connect with Franklin Templeton on Twitter (@FTI_Global). Read the Beyond Bulls & Bears blog featuring perspectives from Franklin Templeton investment professionals around the world and the Investment Adventures in Emerging Markets blog from Mark Mobius (@MarkMobius), executive chairman of Templeton Emerging Markets Group.
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1. Source: Morningstar, Inc. See www.franklintempletondatasources.com for additional data provider information.
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SOURCE Franklin Templeton Investments Corp.