Investors' confidence rose during the first quarter of 2012, according to the John Hancock Investor Sentiment Index™, which was released today by John Hancock Financial Services.  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.

Investors report optimism about equities and foresee market growth. More than half are bullish on stocks (56 percent) and balanced mutual funds (54 percent). For those looking to invest in the market over the next six months, energy (55 percent), technology (53 percent) and healthcare companies (42 percent) lead the way. Investors are feeling optimistic as well about retirement products, with 77 percent saying it is a good time to contribute to 401(k) plans or IRAs. Two-thirds say they are likely to invest in a 401(k) plan within the next 12 months.

Less confidence was shown with fixed products. Nearly two-thirds believe it's a bad time to be holding on to cash in the form of CDs, money market accounts and the like. For bonds, the views were mixed, with nearly thirty percent thinking it is a good time to buy bonds and a similar percentage (26 percent) saying it is a bad time to invest in them. 

"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. "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."

The John Hancock Investor Sentiment Index™ is a quarterly measure of investors' views on a range of investment choices, life goals, and economic outlook, as well as their confidence in these areas.  The John Hancock Investor Sentiment Index™ is derived from a quarterly poll of approximately 1,000 investors, and 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. The first quarter survey was conducted in late February of 2012.

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 percent versus 33 percent in Q4 2011). Moreover, nearly 60 percent believe they will be in a better financial position looking ahead two years from now.

Among the findings for Q1 2012:

• In early 2012, forty-four percent 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 Q3 2011, when 53 percent were very worried about unemployment, and Q4 2011, when 54 percent were.
• Investors continue to be very concerned about the cost of healthcare (60 percent) and the national debt (58 percent). During the quarter, worry also rose about oil and gas prices (49 percent versus 37 percent in Q4 2011).
• More investors predict higher inflation ahead. One-third believe the inflation rate will be four percent or higher in two years (34 percent), a significant increase from Q4 2011 (23 percent).
• Overall, investors are confident in their ability to attain several key financial goals. Nearly all homeowners are at least somewhat confident that they will pay off their mortgage (91 percent), and four in five non-homeowners (83 percent) are confident in their ability to purchase a home.