Investors’ confidence rose during the first quarter of 2012, according to the newly-released John Hancock Investor Sentiment Index.
According to the survey, investor sentiment improved to +21 in the first quarter of this year, compared with a score of +15 in the fourth quarter of 2011, the most substantial increase since the Index was started in early 2011. The improvement this past quarter was driven by a rise in positive attitudes toward investing in stocks and balanced mutual funds.
In a significant finding, more investors this past quarter believe they are in a better financial position today than they were two years ago: 43% versus 33% in the fourth quarter of 2011. Moreover, nearly 60% believe they will be in a better financial position looking ahead two years from now.
“Economic indicators suggest the internal dynamics of the U.S. economy look pretty good right now, and investors appear to be in sync with that,” said Bill Cheney, John Hancock’s chief economist, in a statement. “Their optimism for equities and less positive attitude towards fixed products show that investors are gaining confidence that the country is starting to pull out of its economic downturn. They are beginning to consider taking action by moving their money from the sidelines and into the market.”
Forty-four percent of those polled said they are very concerned about the unemployment rate. However, the share of those who are very concerned over the unemployment rate has decreased significantly from the fourth quarter of 2011, when 54% expressed such concern.
More investors predict higher inflation ahead. One-third, 34%, of those polled believe the inflation rate will be four percent or higher in two years, compared to 23% who expressed this opinion in the fourth quarter of 2011.
Overall, investors are confident in their ability to attain several key financial goals. Nearly all homeowners, 91%, are at least somewhat confident that they will pay off their mortgage, and four in five, or 83%, are confident in their ability to purchase a home.
The online survey was conducted by independent research firm Mathew Greenwald & Associates. A total of 1,006 investors were surveyed between February 13 to February 24.