Investors’ confidence dipped somewhat again in the third quarter of 2012, according to the John Hancock Investor Sentiment Index®, released today by John Hancock Financial Services. Investor sentiment declined by two points to +17 in the third quarter compared with a score of +19 in the second quarter of this year. The shift was driven by a drop in positive attitudes toward investing in bonds partially offset by very small upticks in stocks and real estate.
It was the second consecutive two-point drop quarter to quarter for the Index, which also declined from +21 in Q1 2012 to +19 in Q2 2012. Still, the Index remains above the +15 score in the fourth quarter of 2011, and well above its low of +10 in the third quarter of 2011.
The John Hancock Investor Sentiment Index® is a quarterly measure of investors’ views on a range of investment choices, life goals, and economic outlook, as well as their confidence in these areas. The John Hancock Investor Sentiment Index® is derived from a quarterly poll of approximately 1,000 investors, and reflects the percentage of those who say they believe it is a “good” or “very good” time to invest, minus those who feel the opposite. The third quarter survey was conducted from mid-to late August of 2012.
Investors’ views on most types of investments remained largely unchanged in the third quarter of 2012 compared with the year’s second quarter. Forty-nine percent of investors in the third quarter said it was a good time to invest in stocks compared to 48 percent in the second quarter. Nearly 25 percent thought it was a good time to invest in bonds (24 percent), down slightly from 27 percent in Q2.
However, several measures have changed significantly compared with levels of one year ago. Investors were more bullish on stocks in Q3 of this year, with 49 percent saying it was a good time to invest in them, which is up from 41 percent in the third quarter of 2011. Fifty-one percent of investors had positive views of balanced mutual funds in Q3 of 2012, which also is up significantly from 42 percent in Q2 of last year.
Optimism seems to be rising in certain areas. Positive attitudes are increasing toward retirement products, with 73 percent saying it is a good time to contribute to 401(k) plans or IRAs, whereas in the third quarter of last year that number for IRAs was 67 percent and 66 percent for 401(k) plans. While healthcare costs remain a major worry for investors, the share of investors ranking it highest as a concern (56 percent) is down significantly from 64 percent in the second quarter of 2012.
However not all themes are positive. Optimism about stock market growth has waned. Significantly fewer investors now think the Dow will close above 13,000 in June of 2013 (67 percent), compared with 74 percent in the second quarter of 2012 who thought the market would reach that level. And compared with the second quarter of this year, more people are worried about being able to save enough for retirement (33 percent in Q3 of this year versus 27 percent who were worried in Q2).
“Investors are showing consistency in their attitudes toward many investment products, and seem to be saying there isn’t much on the horizon that would cause them to change their views,” said Bill Cheney, John Hancock’s Chief Economist. “We are continuing to see positive trends, for example with investors remaining committed to investing in retirement plans such as 401(k)s and IRAs. Nine in ten investors (88 percent) are confident in their ability to maintain a financially secure retirement. And 94 percent of those we surveyed describe themselves as long-term investors.”
Among the findings for Q3 2012:
- Investors predicted that blue chip stocks will perform best over the next six months. Twenty-four percent said this, up sharply from 17 percent who thought so in the third quarter of 2011. Small caps have the best outlook according to 13 percent of investors, whereas seven percent thought so a year ago.
- Of the major issues facing the US, investors’ chief concern continued to be the level of the national debt (62 percent), which replaced healthcare costs as the top concern
- Nearly four in ten investors (36 percent) predicted that the inflation rate will be four percent or higher two years from now, while just 21 percent thought inflation will run at less than three percent.
- Saving for retirement remained investors’ biggest financial priority (34 percent said this). As a top priority, paying down debt has dropped in importance, with nine percent saying it is most important to them compared with 14 percent who said so in Q3 of last year.
About the John Hancock Investor Sentiment Survey
John Hancock’s Investor Sentiment Survey is a quarterly poll of 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 1,027 investors were surveyed August 13 th to August 24 th 2012. 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.
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 3.12 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 Corporation
John Hancock Financial is a unit of Manulife Financial Corporation, a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. In 2012, John Hancock celebrates 150 years of serving clients across the United States, while Manulife celebrates its 125th anniversary. Operating as Manulife Financial in Canada and in most of Asia, and primarily as John Hancock in the United States, Manulife Financial Corporation 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$514 billion (US$504 billion) as at June 30, 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 a broad range of financial products and services, 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 .