Interest-rate rises and the prospect of more to come have done little to dampen investors' optimism, with investor confidence hitting an all-time high in the March quarter.
The ASB Quarterly Investor Confidence Survey found that a net 25 per cent of investors were expecting their investment returns tobe better this year than last.
That is up 1 percentage point from the previous quarter and at the highest level since the survey began in 1999.
Residential rental property remains the highest-ranked asset class, with 21 per cent of investors stating that it gives the best return, up from 20 per cent from the previous quarter.
The rise in investor confidence comes despite a Reserve Bank interest rate increase in January and the possibility that Governor Alan Bollard will lift the official cash rate again to 7.75 per cent - one of the highest interest rates in the developed world.
Consumer prices index data last week showed inflation was rising, prompting several economists to forecast an interest rate increase this Thursday.
"The growing investor confidence we saw throughout 2006 has carried on into 2007," said Jonathan Beale, head of Investment Services at ASB.
"Given that confidence levels were at record lows at the beginning of 2006, it's a remarkable turnaround."
After residential property, managed investment funds were the second most popular investment on 14 per cent, followed by term deposits on 11 per cent.
During the quarter, more people became aware of KiwiSaver ahead of its July 1 introduction - about 77 per cent of people were aware of it compared with 72 per cent three months ago.
