Despite turbulent financial markets, clients remain confident in mutual fund investments and continue to rely heavily on advisors for financial advice, according to a new survey released by the Investment Funds Institute of Canada on Thursday.
The survey, conducted by research firm Pollara Inc. in late May and early June, polled 1,895 clients who hold mutual fund in Canada. It found that 78% of investors were confident that mutual funds would help them meet their financial needs, down from 83% in 2007. This represents a higher level of confidence than GICs, bonds and stocks, which received confidence ratings of 64%, 55% and 55% respectively.
“Investors are very confident in mutual funds,” said Craig Worden, vice president of public affairs at Pollara Strategic Insights, who presented the survey findings at IFIC’s annual conference in Toronto on Thursday.
The 5% decrease from last year is insignificant given the 2.3% margin of error within the survey, Worden said: “For us, that’s basically a stable result.”
Given the turbulent financial environment, the results were much more positive than expected, Worden added, noting that clients are “not reacting in a panicked way to things happening in 2008, and this really does speak to the strength and the appeal of mutual funds.”
In reaction to the market conditions, three quarters of investors have not adjusted their investing strategy, the survey found.
Others did make changes, with 14% of investors attempting to reduce risk, 5% seeking buying opportunities and 6% seeking both reduced risk and buying opportunities.
The survey found that at least 81% of investors buy mutual funds from an advisor.
“What happens during turbulent times is that people tend to rely on advisors even more,” Worden said.
Of these investors, 93% report they are either “very satisfied,” “satisfied,” or “somewhat satisfied” with the advice they receive. This was down slightly from 95% in 2006.
The survey found that 91% of investors are comfortable that they have the right information to make informed decisions prior to purchasing funds.
When purchasing a mutual fund, the most important factors that clients consider are risk, suitability of objectives and past performance.
“The very important ratings really all speak to that reward vs risk balance that investors have to face whenever they make a purchase decision,” Worden said.
When asked whether the delivery of printed information on a fund should be compulsory prior to purchase, six out of 10 investors said they prefer this to be voluntary.
“Investors are quite satisfied and quite comfortable with the level of information they receive right now,” Worden said.
But there’s room for improvement, he added. When it comes to investors’ existing mutual fund investments, 25% of those polled indicated they don’t receive all — or even most — of the ongoing information they need.
IFIC: Mutual funds still inspire confidence
IFIC survey finds that clients rely more on their advisors during times when the going gets tough
- By: Megan Harman
- September 25, 2008 September 25, 2008
- 14:17