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Investor Sentiment Improves in Q1, John Hancock Finds

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The John Hancock Investor Sentiment Index, released Friday, increased to +23 in the first quarter from +22 in the fourth quarter last year.  

An upbeat financial outlook also remained stable. Half of investors felt they were in a better financial position today versus two years ago, and 49% expected their position to improve in two years.

Nearly three quarters of those surveyed believed that 2014 would be a positive year for the average American investor.

John Hancock’s Investor Sentiment Survey is a quarterly poll of affluent investors that measures their feelings about the current economic climate, good or bad investment given the current environment, their confidence in reaching key financial goals and their attitudes toward specific financial products and services. 

Independent research firm Greenwald & Associates surveyed 1,028 investors in mid-February. Respondents were required to participate to some extent in their household’s financial decision making, and have a household income of at least $75,000 and assets of $100,000 or more.

Sixty-one percent of investors said it was a good or very good time to invest in stocks, and 56% said the same about stock mutual funds. 

Bonds and cash continued to be unpopular vehicles, with 36% and 61%, respectively, saying it was a bad or very bad time to invest in those.

Investors regarded retirement investment vehicles positively: four out of five said now was a good time to be putting money into 401(k) plans and IRAs. Half of investors felt the same about 529 college savings plans. Optimism held steady for target risk/lifestyle funds and target-date funds.

In other findings, investors believed now was a good time to do the following:

  • Purchase a home (73%)
  • Spend money on a big-ticket item (44%)
  • Sell a home (42%)
  • Spend money on travel or vacations (41%)

“Yet while overall investor sentiment has stayed positive, 21% of those we surveyed are very concerned about inflation,” Bill Cheney, John Hancock’s chief economist, said in a statement.

“Other top concerns are political gridlock in Washington, DC, with 55% citing this as something they are worried about, and the level of the national debt (45%), and half are very concerned about the cost of health care.”

In assessing the outlook for the capital markets, 27% of investors picked blue chips to perform best in the next six months, while 17% chose small-cap stocks (17%) and 11% emerging markets investments.

Fifty-six percent of investors in the survey thought the technology sector most likely to provide the best investment opportunity in the next six months, followed by health care (48%) and energy (46%).