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Investor Sentiment Tanked in Q3: John Hancock

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What a difference a quarter can make. John Hancock’s Investor Sentiment Index dropped to 23 in the third quarter, down six points from its record high in the previous three-month period.

This was the index’s lowest level since the 2014 third quarter, John Hancock said in a statement released Monday.

It said China’s currency devaluation and worries about a possible interest rate increase coincided with investors’ responding to the survey.

Investors in the online survey, conducted in mid-August, were required to have a household income of at least $75,000 and assets of $100,000 or more, and to participate at least to some extent in their household’s financial decision making.

The index reflects the percentage of respondents who say they believe now is a “good” or “very good” time to invest, minus those who feel the opposite.

The survey found that investors’ concerns helped drive down their optimism regarding stocks, bonds and balanced mutual funds compared with the previous three quarters.

Confidence in stock investing fell to 51% from 60% in the second quarter, in balanced mutual funds to 53% from 63% and in bonds to 19% from 25%.

In a February survey, John Hancock found investor optimism about investment prospects in 2015 running high. Respondents’ chief global worry was about unrest in the Mideast, and they thought China would still have the fastest-growing economy.

In the new survey, 70% of investors remained positive about owning their own homes, and 56% had a positive attitude toward real estate investments.

Another positive trend was that investors were staying on track in saving for retirement, with three-quarters saying now was a good time to be contributing to retirement plans.

“Of those in the survey who have a 401(k) plan or other type of defined contribution retirement plan, 80% say they are currently contributing to the plan,” Megan Greene, chief economist at John Hancock Asset Management, said in the statement.

“Four in ten say it is a good time to invest in target-date and target-risk funds, which are primarily held in retirement plans.”

Twenty percent of investors in the new survey said blue chip stocks would perform best over the next six months, down from 29% who said this in the fourth quarter of 2014. Sixteen percent of respondents pointed to small-cap stocks as their other top choice, and 11% to emerging markets.

Fifty-eight percent of respondents in the August poll said their main worry was being able to afford nursing home or long-term care, while 68% were concerned about being able to afford high-quality health care.

More than half worried that they would run out of money in retirement, and just over a third were at least somewhat concerned about their ability to remain in their own home throughout retirement.

One-third expressed concern about the possibility of entering retirement with debt.

— Check out How Fear, Greed and Ego Create Value  on ThinkAdvisor.