Canadian investors have a more bullish outlook for the markets compared to 2013, yet are also more risk averse when it comes to their investment portfolios, according to Franklin Templeton’s 2014 Global Investor Sentiment Survey.
Nearly two-thirds (65%) think Canada’s stock market will be up in 2014, compared to 60% last year. Interestingly, investors aged 65 and older are most likely to think the market will increase this year. Globally, 62% of investors believe their local stock market will experience positive performance in 2014.
This outlook shapes investors’ long-term financial views. The overwhelming majority of Canadian investors (81%) are optimistic about reaching their personal financial goals, roughly on par with investors in the U.S. (84%) and globally (80%) who hold this view.
But Canadian investors continue to cling to conservative investment strategies, though to a lesser degree than last year.
Specifically, 44% plan to be more conservative with their investments in 2014, which is double the amount of investors who indicated that they would become more aggressive (22%). The balance of respondents (34%) don’t plan to make any changes to their strategies. Canadians, however, are trending less conservative than investors globally, 52% of whom are planning to adopt a more conservative strategy this year.
Canadian investors believe stocks, non-metal commodities and property will be the top performing asset classes both in 2014 and over the next 10 years. Looking at stocks in particular, Canadians are more bullish for this year and in the next decade than they were in 2013. Canadians are also more likely than their global counterparts to rank stocks as expected top performers.
While to a lesser degree than in 2013, Canadians say the best opportunities for equity and income investing continue to be in their domestic market. When asked to consider a variety of regions and countries, over a third (35%) of Canadian investors indicated they believe Canada will offer the best equity returns in 2014 and over a fourth (26%) hold that view for the next decade. Looking at fixed income, more than a third of Canadian investors believe Canada will have the best returns in 2014 (38%) and over 10 years (35%).
At the same time, Canadian investors are increasing their expectations for U.S. equity and fixed income market performance, compared to their expectations in 2013, though the large fiscal debt ranked as their chief concern about investing in the U.S. Looking out over the next 10 years, however, Canadians believe Asia will have the best equity market returns globally, but still think Canada will have the best fixed income returns.
Reiterating their home-country bias, when given the choice of several asset classes, Canadian investors are most likely to say that they will add or increase investments in equities in their country, with over one-fourth of Canadian investors expecting to add to or increase their investments in domestic equities in 2014.