Canadian households haven’t changed their investment strategies dramatically since the market collapse of 2008 and 2009, and have actually introduced more risk into their portfolios, new research from Environics Analytics shows.
 
WealthScapes 2010, the latest edition of Environics’ financial database that measures the assets, liabilities and wealth of Canadians, shows that in 2009, investors increased their holdings of stocks and mutual funds, and scaled back their bond and GIC holdings. Environics compiles the data from more than 30 data sources, including the Bank of Canada, Statistics Canada and Canada Revenue Agency.
 
The data shows that the average Canadian household held $43,936 in stocks in 2009, up from $40,989 in 2008, while mutual fund holdings rose sharply to $68,617 from $57,811 in 2008.
 
Average bond holdings fell to $9,587 in 2009 from $11,079 in 2008, and GIC holdings dropped to $38,362 from $40,505.
 
But households also substantially boosted their holdings of cash in 2009, to an average of $35,377, from $28,998 in 2008, indicating a higher degree of caution in the aftermath of the financial crisis.
 
“Clearly, as the global economic situation continues to stabilize, Canadians will have a sizeable cache of funds to re-invest in longer term savings vehicles — or simply go on a shopping spree,” Environics says.
 
Across the country, households in some provinces displayed a greater aversion to risk than others. Ontario households flocked to liquid cash holdings at a particularly high rate in 2009, increasing their average bank account holdings from $35,221 to $44,080 — the highest level of any province.
 
Newfoundlanders appear to be playing the markets more conservatively than the rest of the country, with 55.9% of their portfolios in relatively safe bank deposits and bonds, and fewer stocks and mutual funds than any other province, at $12,918 and $22,534, respectively.
 
Meanwhile, Alberta households favour riskier investment vehicles, the study shows, with stocks and mutual funds comprising 69% of their portfolios.
 
Saskatchewan investors favoured mutual funds more than the other provinces in 2009, with their holdings of these assets surging to $82,333 from $62,335. Households in the Territories also turned to mutual funds in a big way, boosting their fund holdings to an average of $47,433 from $36,124.
 
Household net worth climbs in 2009
 
All provinces enjoyed a boost in average household net worth in 2009, according to Environics’ WealthScapes. The average net worth of Canadians rose by 4.6% to $351,282.
 
British Columbia still ranks as the wealthiest province, with an average net worth of $489,812, followed by Alberta, at $415,712. But Ontario is rapidly closing in on Alberta’s second-place ranking, according to Environics, with an average household net worth of $403,194 – just 3% below Alberta’s.
 
“If Ontario maintains its robust growth in net worth — 4.7% compared to 2.1% in Alberta — Ontario will surpass Alberta’s number-two ranking by 2011,” Environics says.
 
Saskatchewan ranks fourth with average net worth of $313,326, up a sharp 6.5% from 2008.

IE