Fears of unstable equity markets and the subprime crisis in the U.S. dampened Canadians’ investing outlook, according to sentiment index released today by Manulife Financial.

The quarterly poll fell five points, to +22, for March after gaining seven points in the last quarter.

“For the past two years the overall index has remained above +20,” said Paul Rooney, president and CEO of Manulife Canada. “In our latest poll we’re seeing some signs of investors adjusting to the current economic climate, in particular away from equities. Yet they’re showing strong interest in real estate and specific funds.”

The index stems from a survey of 1,000 Canadians done in late March. This quarter’s results saw four of 10 investment categories and vehicles gain ground since December’s index.

However, in response to a separate question, nearly a third of Canadians (32 per cent) said they have changed their investment style recently (either temporarily or permanently) as a result of current economic conditions. Those nearing retirement (older than 50) were most likely to say they have changed their style.

The Manulife Investor Sentiment Index has been around since 1999. It monitors how Canadians say they feel about investing in 10 different categories and vehicles. The index reflects the percentage of those who say they believe it is a good or very good time to invest minus those who feel the opposite.

Overall, investing in personal real estate was the most popular place for investors to park their money. Buying real estate as an investment rebounded sharply this quarter on the index, and was followed by fixed-income investments, balanced funds and cash. While cash has traditionally not been a popular place to keep money, this year it beat out equities, which sank to become the only category with a negative index score.

In terms of investment vehicles, RRSPs topped the index, followed by RESPs, mutual funds and finally segregated funds. The index for mutual funds fell eleven points from the last quarterly survey, reflecting 45% who said now is a good or very good time to invest in mutual funds, while 28% said it was a bad or very bad time.

“We always encourage investors to work closely with their advisors, particularly given short-term changes in the economy and markets,” said Rooney. “That helps them to balance guaranteed versus variable investments, as well as stay focused on their short- and long-term goals.”