Canadian investor confidence in mutual funds is on the rise, reveals the latest Manulife investor sentiment index.

Overall, confidence in mutual funds increased to 22% in December 2016, up from 11% in November 2015. Similarly, IFIC reports an increase in mutual fund assets of $133.2 billion, or 11%, between January 2016 and January 2017.

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For balanced mutual funds, investor confidence rose to 26% in December, up from 16% in November 2015.

In fact, investor confidence was consistent or gained over the past year for each of the following:

  • ETFs (confidence increased to 4% from -7%, reflecting the record levels of assets invested in ETFs)
  • Segregated funds (confidence increased to 10% from 4%)
  • TFSAs (to 57% from 50%)
  • RRSPs (to 41% from 38%)
  • RESPs (to 29% from 28%)

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But confidence doesn’t necessarily translate to increased investing.

For example, a BMO survey finds that fewer Canadians (46%) planned to contribute to RRSPs by the March 2017 deadline compared to the previous year’s deadline (50%). And StatsCan data show that the number of RRSP contributors dropped by about 16% between 2000 and 2013 for those between the ages of 25 and 54.

Although the StatsCan data also show that TFSA contributions increased for that age group during the same period, the BMO survey reveals TFSA contribution levels in 2016 were down from 2015 levels.

The No. 1 reason for not contributing to either an RRSP or TFSA is lack of funds, BMO says.

That lack of funds is probably why Canadians aren’t investing their tax refunds.

The Manulife survey, conducted by Environics Research, polled 2,001 Canadians, aged 25 and up, online in December 2016.

Manulife found that 32% of Canadians plan to keep their refunds in their bank accounts, despite relatively low investor confidence in cash (15%). Only 14% of Canadians plan to use their tax refunds to invest in their RRSPs, with another 4% planning to use refunds to invest in RESPs.

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Other ways Canadians plan to use their tax refunds are to:

  • pay down debt (30%),
  • pay down mortgages (11%),
  • go on vacation (10%), or
  • buy something material (7%).