Investor Sentiment Shows Slight 2Q Dip

Investor confidence softened somewhat in the second quarter, according to the Investor Sentiment Index, released Monday by John Hancock Financial Services.  

The John Hancock Investor Sentiment Index remains in positive territory. Slight declines, to +19, from +21 in the first quarter, are because of less-optimistic views on equities. More investors are concerned about Eurozone debt and less worried about unrest in the Middle East.    

The Index shows that investors overall feel almost the same about investing this year compared with last year. In the same quarter a year earlier, the Index score was +18.

Investing for retirement remains popular. Nearly eight in ten investors (78%) feel that now is a good time to be investing in 401(k) plans, and three-quarters (74%) have similar feelings about individual retirement accounts (IRAs). Investors felt about the same a year ago, with 80% saying the second quarter of 2011 was a good time to be investing in 401(k) plans, while 79% said it was a good time for IRA investing.

Investors’ views on most types of investments remain unchanged in the second quarter from the first. Attitudes toward balanced mutual funds were similar to the previous quarter, with 52% now saying that it is a good time to be investing in balanced mutual funds, a slight dip from 54% in the first quarter.

Blue-chip stocks will perform the best over the next six months of this year, said nearly 20% of investors. Small-cap stocks (picked by 16% of investors to perform best) were next, followed by emerging-market securities (14%). Only 4% of those surveyed believe international equities will perform well, with even fewer (2%) optimistic about government bonds. Investors believe that energy, technology and health care companies will provide the best investment opportunities in the next six months. Investors are more inclined than in the previous quarter to cite health care as a leading sector (47% compared with 42% last quarter).


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Among the key findings of the index:


  • Investors believe they are in a better financial position today compared with two years ago (42%). Half (50%) believe that, in two years, they again will be in a better financial position. This is a significant decrease from 57% in the previous quarter and 58% in the same quarter a year earlier.
  • Investors mention the value of their investments decreasing and being able to save enough retirement as their biggest personal financial concerns. Investors are highly confident in their ability to attain many lifetime financial goals, with paying off a mortgage (94%) and maintaining a financially secure retirement (90%) topping the list.

The John Hancock Investor Sentiment Index, conducted quarterly, 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 second-quarter survey was conducted online by Mathew Greenwald & Associates. A total of 1,011 investors with household incomes of at least $75,000 and assets of $100,000 were surveyed May 14 to May 25. To qualify, respondents were required to participate to some extent in household financial decision making.