Risk is back on the menu

Canadian investors may be showing a little more appetite for risk, with a vast majority telling a recent survey they would invest in growth-oriented mutual funds over the next year.

It should be noted that the definition of “growth-oriented” in this case is not that of the industry style-box, but refers to capital appreciation strategies.

The TD Asset Management Inc. Mutual Funds Investor Poll found 42% of respondents planned to invest in balanced funds, 27% in equity funds and 21% in dividend funds. There is overlap within these groups, but the takeaway is that equity risk appetite appears to be back.

“We saw many investors move to more conservative investment products such as fixed income funds as a reaction to the sharp volatility experienced during the recession,” says Thomas Dyck, president, TD Mutual Funds. “With market conditions improving, investors have returned to growth-oriented asset classes to meet their financial goals.”

The majority of investors (73%) included stocks in their overall retirement funding plan, either through pure equity funds of through balanced funds.

“Investors understand the need for growth-oriented funds in their portfolios and they are looking for high quality investments,” says Dyck. “An equity-based or balanced mutual fund that follows a disciplined investment approach and creates long-term value is a good way to gain that exposure and balance risk.”

Seventy-eight percent of respondents said their risk tolerance was either the same or higher than it was a year ago. Among the 22% who said they were more risk averse, nearly one third were 55 years of age, or older.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.