If the inaugural American Capital index of investor intentions survey is any measure, the future looks bright for mutual funds.
Nearly 43% of respondents in a new nationwide poll said they intend to place money in savings or investments, compared with 19% who said they would withdraw money from investments. Most of those answering said they favored mutual funds as investment choices.
American Capital Management and Research hired Austin, Tex.-based Delta Strategies to conduct the survey, which will be carried out monthly.
Delta phoned 1,000 households nationwide at random to quiz them about their investment intentions.
Asked what they would do with $10,000 if it suddenly landed in their lap, 31% of the respondents said they would stash the money in a savings account, followed by 21% who said they would buy real estate and 20% who said they would invest in mutual funds.
American Capital, a $16 billion-asset mutual fund family serving one million shareholders, is based in Houston and owned by New York-based Primerica Corp.
Officials said they intend the survey to be used by their broker network, to gain publicity for the fund group, and to provide information to the public.
"It's still early, but we're very pleased with our start-up. We've been looking for a way to try and add some value to our services," said Donald McMullen Jr., president of American Capital Management.
"We've been trying to provide a gauge or measure for the investment professional and public as a way to sense the mood of the investors out there," Mr. McMullen added. "With this index, it's the first time we've seen anybody methodically going after trying to measure that."
To Early to Spot Trends
Mr. McMullen said it was too early to gain much insight from the survey results becuase they can't be compared to previous polls in order to detect and predict trends in investor sentiment. The poll is intended to be broad based and reflect a cross section of the public, not just the investing public.
As for the occasional statistical blip or case of outright lying -- in many olls respondents will tell the interviewer what he or she appears to want to hear -- Mr. McMullen believes time and overall averages will cancel out those factors.
American Capital will disseminate the results through the media and then tailor the reports for use by the company's bank and brokerage clients.
For example, if the poll shows that investors have high anxiety about the markets, American Capital will develop "handholding" techniques designed to inform and comfort clients.
Mr. McMullen said the largest surprise was the intention by 21% to invest in real estate, along with 23% saying they owned real estate other than their residences.
The survey asked if the next two to three months would be a good time to invest, and 38% said yes. Twenty-five percent said no, and 37% didn't know or had no opinion.
About 30% said it was a good time to invest in the stock market, 27% said stock investing would be bad, and 42% said they didn't know or care.
Interestingly enough, mutual funds came out better than the stock market: 36% said it was a good time to buy mutual funds, as opposed to 19% who thought funds would be a bad idea.
Arthur Zimmer, a fixed-income fund manager for Oppenheimer Invetment Management, said the survey could be useful if it is truly a cross section of the investing public, but warned against forgetting that many investment objectives are long term.
"It could be a useful tool. The potential drawback is if it tended to make people concentrate on short-term horizons. That can be dangerous," Mr. Zimmer said.