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Investor sentiment declines to lowest point since Q3 2013

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Investor sentiment declines to lowest point since Q3 2013

Confidence about investing in stocks and balanced mutual funds dropped significantly.

Investor sentiment declined in the first quarter of 2016, for the third consecutive quarter, and reached its lowest point since the third quarter of 2013, according to the John Hancock Investor Sentiment Survey. The John Hancock Investor Sentiment Index score for the first quarter of the year is +19, a three point drop from the fourth quarter of 2015.

The index reflects the percentage of investors who say they believe it is a "good" or "very good" time to invest, minus those who feel the opposite. "75% of investors remain optimistic about the growth of the US economy in the near future."

Positive attitudes toward investing in equities, through stock and balanced mutual funds, declined significantly. More investors said they are inclined to hold on to cash compared with previous quarters, rather than putting it to work in the market.

"The downturn in sentiment recently is likely a reflection of the volatile track record of the stock market since the beginning of the year as well as the crash in oil prices in mid-February, which took place while the survey was underway," says Frances Donald, economist with John Hancock.

Overall, 75% of investors remain optimistic about the growth of the US economy in the near future, but half (49%) believe that 2016 will not be a positive year for the average investor. Blue chip stocks led among market segments in terms of performing well over the next six months, with 17% of investors choosing them, though investors have less conviction compared with the first quarter of 2015 when 24% chose them.

The cost of healthcare continues to lead among investors' worries, with 56% expressing great concern about this issue. A majority (51%) also are very concerned about political gridlock in Washington.

Regarding personal financial priorities, among those surveyed who are working, 33% said saving for retirement is their main goal. Among retirees, maintaining their current lifestyle ranks as their chief priority (65%). Overall, 14% say that paying down debt remains a top financial priority.

More investors (18%) claim to be in a worse position, financially, than they were two years ago. This is up significantly from the first quarter of 2015, when 12% said they were in a worse financial position.

 

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