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John Hancock: Investor sentiment drops to level of one year ago

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John Hancock: Investor sentiment drops to level of one year ago

Investor confidence toward stocks, bonds and mutual funds declines significantly compared to second quarter 2015.

The John Hancock Investor Sentiment Index fell in the third quarter of 2015 to a level not seen in a year, after reaching its highest point since inception in the second quarter of this year. Worries about a possible Fed hike in interest rates and China's devaluation of its currency coincided with investors' responding to the survey, helping drive down their optimism regarding stocks, bonds and balanced mutual funds compared to the previous three quarters.

According to the survey, confidence in investing in stocks declined to 51% from 60% in Q2 of 2015, in balanced mutual funds to 53% from 63%, and in bonds to 19% from 25%. However, investors remain positive about owning their own homes (70%) and also are positive on real estate investments (56%).

Confidence in investing in stocks declined to 51% from 60%.

"Despite the drop in sentiment from previous quarters, our survey revealed a key positive trend – which is that investors are staying the course when it comes to saving for retirement, with three-quarters of respondents saying it is a good time to be contributing to retirement plans," noted Megan E. Greene, Chief Economist, John Hancock Asset Management.  "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. 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."

Investors stayed steadfast in their views of what types of investments are likely to perform strongly in the near future, though there is more uncertainty. Twenty percent say that blue chip stocks will perform best over the next six months, though this level is down from 29% in Q4 of 2014. Small cap stocks (16%) and emerging markets (11%) are other top choices.

Topping the list of investor concerns is worry about being able to afford nursing home or long-term care (58%), while 68% are concerned about being able to afford high quality healthcare. More than half are concerned that they will run out of money in retirement (55%). Just over a third are at least somewhat concerned about their ability to remain in their own home throughout retirement. One third express concern about the possibility of entering retirement with debt.

 

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