Investors have high level of confidence in mutual funds, says survey

By Susan Yellin | September 28 2018 09:30AM

Photo: Freepik

Confidence in mutual funds has reached its highest point since the Investment Funds Institute of Canada (IFIC) began tracking the sentiment 13 years ago, according to a joint IFIC-Pollara Strategic Insights survey released Sept. 27.

The survey indicates that Canadian investors have more confidence in mutual funds than in any other investment vehicle and also have high confidence in their investment advisors.

A total 89 per cent of investors said they were confident in mutual funds meeting their financial goals, up from 85 per cent last year. Only 61 per cent of investors said they were confident that stocks would meet their goals, while 66 per cent of investors gave the same sentiment about GICs and other term deposits.

Half of all the Canadian investors surveyed said they use a single advisor for all investments, primarily for investment and financial planning and to a lesser degree, for retirement planning.

Advisors provide value

The survey also shows that those with an advisor feel they get good value for their money. This comes at a time when they are becoming more aware of certain disclosure requirements, known as CRM2, which provides more cost and performance figures in their mutual fund statements.

However, not all was positive in the survey. There was a 10 per cent drop in the number of investors who say the reports are easy to understand and an 8 per cent decrease in the number who say the statements provide all the necessary information.

Improving disclosure

Paul Bourque, president and CEO of IFIC, said the results show how important it is for mutual fund companies to continue to improve disclosure and has commissioned a firm to determine how mutual fund companies can make the disclosure more effective.

“This is the kind of evidence we take and absorb and say ‘what can we do to move the dial and change the direction’… and see whether we can actually influence those results with getting the industry on a better standard of disclosure that’s more meaningful to investors,” said Bourque.

Some 59 per cent of the mutual fund investors said they preferred that their advisor be paid through mutual fund fees that reduce their investment returns, while 33 per cent said they preferred to be charged a fee for ongoing advisory services directly by their advisor.

Next year, IFIC intends to include ETFs in its survey along with GICs, stocks and bonds.

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