Investor Sentiment Ticks Up

Interest in equities continued to grow through the end of 2013, especially with regard to retirement-based investments, year-end analysis shows.

The John Hancock Investor Sentiment Index rose slightly in the final quarter of 2013, reaching +22 from +20 observed in Q3. The index ended 2013 four points higher than in Q4 of 2012, and seven points higher than the same period in 2011.

A bigger jump in enthusiasm was measured for retirement plan investments, index results show. At the end of Q4 2013, more than eight in 10 (83%) investors agreed that now is a good time to invest in 401(k) plans, compared with 73% favoring such investments a year ago.

Investments made within individual retirement accounts (IRAs) showed a similar uptick. At the end of Q4 2013, 81% of surveyed investors agreed that now is a good time to invest in an IRA, up from 72% a year ago.

Looking generally at stock market investments, positive attitudes rose to 60% in Q4 of 2013, compared with 55% in the third quarter of the year. A majority of investors (56%) also remain positive on stock mutual funds—a level that is significantly higher than the fourth quarter of 2012, when 45% of respondents had favorable views of such funds.

Optimism held steady for investing in lifestyle or target-risk funds, both at 39%. Optimism around target-date funds also remained steady, at 35%.

Investors remain negatively disposed toward bonds, with 39% saying now is a bad time to invest in fixed-income instruments. Sixty-four percent said staying in cash should also be avoided at this time.

The share of investors who believe they are in a better financial position now compared with two years ago rose to 52% in the last quarter, up 10 points from the fourth quarter of 2012.

Other results included in the index report show there are several issues that are consistently worrying investors—especially those engaged in retirement planning.

A top concern, explains Bill Cheney, John Hancock’s chief economist, is being able to afford quality healthcare (66%), even though the share of investors who express healthcare concerns is down about five percentage points from the third quarter of 2013. 

Investors also frequently mention that they are at least somewhat concerned about being able to afford nursing home or long-term care if needed (59%). Others worry about running out of money in retirement (52%), and about experiencing a substantial decline in assets just before retiring (45%).

More on the survey’s results and methodology is available here.