Canadian investors in 2024 are more confident, more broke: Survey #CanadaFinance
CashNews.co
Canadians are more confident in various investment options this year, even as economic conditions have seemingly led to fewer people holding investments, a survey from the Investment Funds Institute of Canada (IFIC) says.
The survey, conducted by Pollara for IFIC, offers considerable insight into the investment preferences of Canadians. It gives a sense of how portfolios have changed, suggests a growing acceptance of cryptocurrency, underlines (yet again) the impact of inflation and indicates some sharp differences in the mindset of investors who lean towards mutual funds and those who prefer exchange-traded funds (ETFs).
With 18 previous years of analysis, the survey also provides a long view on investment trends.
Here are the highlights.
The survey found 64 per cent of Canadians hold some kind of investments, down from 67 per cent last year.
“I think the economic environment could have affected people’s ability to put money aside for the future, as opposed to just paying for ongoing daily expenses,” Ian Bragg, IFIC’s vice president of research and statistics, said in a media call about the survey.
“If you look at the people who are new to investing, like people who are starting out, people who are younger, have less disposable income,” added Pollara senior vice president Lesli Martin. “It makes sense that perhaps holding investments has gone down because those people are going to be the ones that are really impacted by those problems.”
After dropping in 2022, confidence that “investments will meet financial goals” rose in 2023 and again in 2024. This year, confidence increased in all categories, with stocks, bonds, and mutual funds having the confidence of 70 per cent or more of investors.
“[I]n 2022 there was decline in confidence among mutual fund investors, particularly, and this was for mutual funds, but it was also pretty much across the board,” said Martin. “There was just a drop in confidence of any investment products. In 2023 that bounced back, we had a bit of a rebound … And this year we saw even a stronger confidence, so that that feeling of distrust was very short lived.”
Mutual funds remain the most common investment
Among the 64 per cent of Canadians with investments, 61 per cent have mutual funds, down from 64 per cent in 2023. The proportion owning stocks also declined, from 49 per cent to 47 per cent. 24 per cent of investors have ETFs, the same as last year.
Cryptocurrency gained ground, with 18 per cent owning cryptocurrency assets, up from 14 per cent in 2023.
The report says 73 per cent of Canadian investors hold mutual funds or ETFs (48 per cent mutual funds only, 9 per cent ETFs only and 16 per cent having both mutual funds and ETFs). “A lot of our ETF investors also have mutual funds. Not a lot of our mutual fund investors have ETFs,” Martin said.
Mutual fund investors are highly confident in mutual funds, with 92 per cent confident those investments would meet their financial goals. They have “some confidence” in options such as stocks and GICs, Martin said, “but there is a gap there — their mutual fund confidence is much higher than anything else.”
ETF investors, conversely, appear to be more optimistic about a broad range of investment types. A greater proportion of ETF investors are confident about every investment type when compared to mutual fund investors, with the exception of mutual funds themselves, where 88 per cent of ETF investors have confidence.
For ETFs and digital assets, ETF investors are considerably more confident. 94 per cent of ETF investors are confident in ETFs (versus 58 per cent of mutual fund investors). For digital assets, 38 per cent of ETF investors are confident, versus 29 per cent of mutual fund investors.
“Most mutual fund purchases have been made through someone offering advice,” the report notes, while “ETF purchases are more likely to be split between with advice and without.”
Only 16 per cent of mutual fund investors make all their purchases without advice, while 41 per cent of ETF investors do so. The ETF investors most likely to fall into this category are “younger, men, who feel they are knowledgeable and who have a smaller portfolio,” the report says.
“Even the younger mutual fund investors are likely to rely more on their advisor than younger ETF investors,” Martin said. “It’s just a different mindset … Mutual fund investors just seem to be more like, ‘I’m just going to talk to my advisor and do what they say,’ regardless of age.”
(Among both mutual fund and ETF investors who do use financial advisors, more than 90 per cent are satisfied with the advice they get.)
ETF investors are also more likely to invest on their own — 68 per cent invest directly occasionally and one-third regularly, versus 41 per cent of mutual fund investors who do so occasionally and 16 per cent who do so regularly. ETF investors are also more likely to have purchased cryptocurrencies through an online exchange.
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf.
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