Investors' confidence softened somewhat in the second quarter of 2012, according to the John Hancock Investor Sentiment Index, released today by John Hancock Financial Services.
Investor sentiment declined by just two points to +19 in the second quarter, compared with a score of +21 in the first quarter of this year. The shift was attributed to a drop in positive attitudes toward investing in equities. Fewer than half of investors surveyed are bullish on stocks (48% compared to 56% who were bullish in the first quarter this year). The index also shows that investors overall feel almost the same about investing this year compared to last year. In the second quarter of 2011, the index score was +18.
Investors' views on most types of investments remain unchanged in the second quarter of 2012 from the year's first quarter. Attitudes toward balanced mutual funds were similar to the prior quarter, with 52% now saying that it is a good time to be investing in balanced mutual funds versus 54% in the first quarter. Also unchanged were investors' mixed views on bonds, with 27% saying it was a good time to invest in bonds (28% in the prior quarter) while 25% think it is a bad time (26% said it was a bad time in the first quarter).
Investing for retirement remains popular, with nearly eight in ten investors feeling that now is a good time to be investing in 401(k) plans and three-quarters have similar feelings about 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.
Blue chip stocks will perform the best over the next six months of this year, say nearly 20% of investors. Small-cap stocks (picked by 16% of investors to perform best) were next, followed by emerging market securities (14%). Only four percent of investors believe that international equities will perform well, with even fewer optimistic about government bonds (2%).
Investors believe that energy, technology and healthcare companies will provide the best investment opportunities in the next six months. Investors are more inclined than in the previous quarter to cite healthcare as a leading sector (47% compared to 42% last quarter.)
"Having been through considerable volatility in the past few years, investors seem to be saying they aren't terribly fazed by economic trends of the past quarter," said Bill Cheney, John Hancock's chief economist. "It looks as though reasonably healthy sentiment is prevailing, with investors focused on meeting their financial goals and investing for retirement. Ninety-three percent of the respondents in our survey describe themselves as long-term investors, and 91% say they are savings-oriented."
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 online survey was conducted by independent research firm Mathew Greenwald & Associates. A total of 1,011 investors were surveyed May 14 to May 25, and respondents needed 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.