TORONTO, Jan. 30, 2012 /CNW/ - After reasonably strong equity returns
during the last quarter of 2011, the majority of Canadian investment
advisors are of the view that equity markets should increase again
during the first quarter of 2012 , according to the Q1 Advisor
Sentiment Survey (the "Q1 Survey") conducted by Horizons Exchange Traded Funds Inc. ("Horizons ETFs").
The Q1 Survey asked Canadian investment advisors to give their outlook
on 18 distinct asset classes. Advisors responded whether they were
bullish, bearish or neutral on the anticipated returns for these asset
classes over the next quarter.
The fourth quarter of 2011 saw a number of asset classes rebound, most
notably equities. The Q1 Survey results indicate that the majority of
Canadian advisors expect equity returns to remain in positive territory
over the next three months.
Roughly two out of three Canadian advisors (60%) were bullish on
Canadian equities, as represented by the S&P/TSX 60™ (Total Return)
Index, after this index posted a positive 2.07% return on the quarter.
Similarly, bullish sentiment increased more than 7 percentage points
from the previous advisor survey on U.S. large cap equities, as
represented by the S&P® 500 to 58%, after an 11% gain on that index
last quarter. Bullish sentiment also increased for the NASDAQ, from 54%
to 60% after a 6.48% return last quarter.
"Stocks were a good asset class to be invested in last quarter, and it's
clear that many Canadian advisors expect them to deliver strong returns
for the first part of 2012," said Howard Atkinson, CEO of Horizons ETFs.
Bullish sentiment on most energy asset classes held through the last
quarter. Crude oil delivered stellar returns in Q4, increasing nearly
25%. More than half of Canadian advisors (55%) remain bullish in their
outlook for crude oil for this coming quarter. Similarly, bullish
sentiment on the S&P/TSX Capped Energy Index™ was 57% after this sector
returned 11.3% last quarter.
The same optimism does not exist for natural gas prices however. Natural
gas investors had a dreadful Q4, losing 18.5%. Bullish sentiment on gas
prices also dropped 17 percentage points to just 28%. The lion's share
of advisors (47%), are neutral in their outlook for gas for this coming
"Energy prices had already been on a downward trajectory going into the
third quarter, but most Canadian advisors had remained bullish in the
Q4 Survey. That conviction would have paid off for them, as most oil
related asset classes delivered great returns." Mr. Atkinson said. "The exception is natural gas, which continued to slide in Q4, and the
Q1 2012 Survey results suggest advisors don't expect there to be any meaningful
improvement in gas prices in the near future."
2011 was a year marked by high volatility. In last quarter's sentiment
survey, the majority of advisors correctly predicted that volatility,
as represented by the VIX Index would decrease, which it did by 33.4%.
Bearish sentiment on the VIX Index did however drop this quarter to
Another poor performing asset class last quarter was gold. Gold bullion
declined 3.7% last quarter, however bullish sentiment on gold bullion
held at about 50%. That said, bullish sentiment on gold producer
equities, which dropped more than 8% in the last quarter of 2011,
declined dramatically from 57% last quarter to 49% for this quarter.
"Gold is a traditional safe-haven during volatile markets. With sort of
muted expectations on volatility from advisors, it would make sense that their
appetite for gold investing has also decreased," Mr. Atkinson said.
Sentiment on the value of the Canadian dollar versus the U.S. dollar was
mixed, with there being almost as many bears on the loonie (37%) as
there were bulls (38%).
"The Q1 Survey results suggest that many advisors may have a target
around parity for the loonie versus the greenback, which the loonie has
tended to trade near for the last 6 months," Mr. Atkinson said.
Also on the currency front, this is the second quarter that the advisor
sentiment survey has tracked opinion on the Canadian dollar versus the
Australian dollar. More than three quarters of advisors were neutral on
the direction of this relationship - very perceptive - since the
Australian dollar and the loonie tend to move in the same direction
versus the U.S. dollar.
"The Australian dollar has a much higher yield, which is why you may see
high foreign investment in that currency from low-interest currency
regions like Canada and the U.S.," Mr. Atkinson said. .
Advisors' accurately predicted the market direction on 9 out of the 18
asset classes tracked on the survey.
"Advisors batted .500 last quarter in terms of the number of asset class
directional moves they predicted accurately," Mr. Atkinson said. "It should be noted that on a number of asset classes where there were
positive returns, advisor sentiment was mixed. There were few instances
of advisors collectively being on the wrong side of their predictions."
About the Sentiment Survey
Horizons Exchange Traded Funds Inc. conducts the only quarterly
sentiment survey of Canadian investment advisors. The survey
quantitatively measures advisors' quarterly outlook as it relates to
key benchmarks covering equities, bonds, currencies and commodities.
Full survey results are available at http://www.horizonsetfs.com/sentimentSurvey.asp.
About Horizons Exchange Traded Funds Inc. (www.horizonsetfs.com)
Horizons ETFs is an innovative financial services company offering the
Horizons ETFs family of ETFs. The Horizons ETFs family includes a
broadly diversified range of investment tools with solutions for
investors of all experience levels to meet their investment objectives
in a variety of market conditions. With more than $3.2 billion in
assets under management and 75 ETFs listed on the Toronto Stock
Exchange, the Horizons ETFs family makes up the largest selection of
ETFs in Canada. Horizons ETFs is a subsidiary of Horizons ETFs
Management (Canada) Inc. and a member of the Mirae Asset Financial
SOURCE Horizons ETFs Management (Canada) Inc.
For further information:
Howard Atkinson, Chief Executive Officer, Horizons ETFs
(416) 777-5167, firstname.lastname@example.org