Canadian advisors and investors are bearish on equities heading into Q3

Horizons ETFs' surveys show advisors and investors are increasingly bearish on Canadian and U.S. equities

TORONTO, July 20, 2015 /CNW/ - Heading into the third quarter of 2015 ("Q3"), both Canadian advisors and investors are increasingly bearish on Canadian and U.S. equities, according to the Q3 2015 Advisor and Investor Sentiment Surveys ("Q3 Surveys") conducted by Horizons ETFs Management (Canada) Inc. ("Horizons ETFs").

The Q3 Surveys asked both advisors and investors for their expectations of returns — bullish, bearish or neutral — on 13 distinct asset classes for the upcoming calendar quarter (Q3 2015).  

Overall, bullish sentiment for both advisors and investors declined for over half of the asset classes and indices. Advisors were only slightly bullish on three out of 13 asset classes, while investors were bearish on every asset class and index. For both advisors and investors, the largest drops in bullish sentiment were observed when asked about key indices such as the S&P/TSX 60TM Index, the S&P 500®, and the NASDAQ-100®.

Looking ahead to Q3, 39% of advisors said they were bullish on S&P/TSX 60TM Index, compared to the 54% for the second quarter of 2015 ("Q2"), a drop of 15 percentage points. Investors were much less optimistic about the index heading into Q3, with bullish sentiment declining 13 percentage points to 29%, compared to the 42% who said they were bullish last quarter. Advisor and investor bullish sentiment for the index was one of the largest sentiment disparities in the surveys, differing by 10%. At the end of Q2, the index was down 2.47% (as at June 30, 2015).

"Instability in China and Greece have dampened the optimism for the Canadian market we would normally see; the Canadian economy is heavily reliant on Chinese demand for oil, and without that rising, investors will remain overly cautious," says Howard Atkinson, President of Horizons ETFs. "Advisors as usual are more bullish than investors due to their ability to tune out negative news headlines and stay focused on longer-term trends."

Looking at U.S. indices — the S&P 500® and NASDAQ-100® — both the number of advisors and investors who are bullish on the indices declined. Only 57% of advisors are bullish on the S&P 500® heading into Q3, compared to 68% last quarter, a drop of 11 percentage points. Investor bullishness fell the same amount down to 37% from 48% last quarter.

Advisors' bullish sentiment for the NASDAQ-100® going into Q3 fell to 57% from 65% last quarter, while bearishness increased to 23% from 18%.  Similarly, investors' bullish sentiment for the NASDAQ-100® also fell to 42% from 47%, meanwhile bearishness increased to 34% from 26% last quarter.

The S&P 500® had a dip in performance of 0.23%, meanwhile the NASDAQ-100® rose 1.46% last quarter (as at June 30, 2015). 

"There is more bullish sentiment for the U.S. because of its sound economic fundamentals, unlike Europe and Asia, which saw their markets rise on the heels of quantitative easing," says Mr. Atkinson. "The drop in bullishness we see for the U.S. this quarter results from the Fed's pullback of quantitative easing and investors and advisors being cautious of how the market will perform now that it's standing on its own two feet."

Bullish sentiment for advisors on the S&P/TSX Capped Financial IndexTM fell slightly to 37% down from 40%. Similarly, the number of bullish investors remained flat at 36%. Expectations are in line with performance for Q2 with the index falling slightly by 0.25% (as at June 30, 2015).

"Investors and advisors continue to be skeptical of financial stocks as there are hints of another interest rate cut," said Mr. Atkinson. "The index delivered flat returns, which suggests that revenues have been muted by poor interest margin spreads."

For the S&P/TSX Capped Energy IndexTM, bullish sentiment for advisors was at 42%, only rising 1% quarter-over-quarter. Investors' sentiment remained flat with 33% bullish on energy heading into Q3. Over Q2, the index fell 5.46% (as at June 30, 2015).

Investors and advisors expressed similar levels of bullish sentiment towards crude oil prices for Q3 with 41% of advisors and 42% of investors expecting prices to rise. Bearish sentiment for advisors decreased slightly to 29% compared to the 30% of advisors that were bearish on crude last quarter. Investors' bearishness on crude also fell to 32% compared to the 36% that were bearish on the commodity last quarter.  

For the Q2 period, the spot price of crude oil rose approximately 25% to US$59.47/barrel (as at June 30, 2015). 

Bullishness for natural gas rose for both advisors and investors heading into the upcoming quarter. Advisors' bullish sentiment to 28% from 25%, while investors' bullish sentiment increased nine percentage points to 31% from 22%. The price of a natural gas one-month forward contract rose 7.27% in Q2 (as at June 30, 2015).

Expectations for crude and natural gas played into sentiment for the Canadian dollar versus the greenback. Both advisors and investors displayed more bearishness and less bullishness for domestic currency compared to last quarter. The number of bearish advisors increased 12% to 53% from the 41% last quarter. Investors' bearishness remained flat at 44% quarter-over-quarter. The Canadian dollar gained 1.51% against the U.S. dollar over Q2 (as at June 30, 2015).

"The U.S. dollar has benefited from global uncertainty, as many investors view the greenback as a flight to safety," said Mr. Atkinson. "After a rout in oil prices, there is skepticism that the Canadian dollar will trend above 80 cents this year."

Of the other commodities, advisors and investors diverged in their sentiment towards gold stocks and gold bullion. The percentage of advisors that were bullish on the S&P/TSX Global Gold IndexTM fell to 29% from 30% last quarter; the number of investors that were bullish rose to 42% from 38%.

For gold bullion, bullish advisors increased to 33% from 30% last quarter, as did investors, with 48% bullish, up 5% from the 43% that expressed such sentiment last year. Gold bullion prices fell 0.95% during Q2.

Bullish sentiment for silver bullion heading into Q3 trended slightly upwards for both advisors and investors. About a third of advisors (31%) remained bullish on the metal compared to 29% last quarter. Similarly, 43% of investors were bullish on silver bullion, a one percentage point rise from last quarter. Prices for the metal fell 5.56% during the quarter.

"We saw a slight uptick on the bullishness for gold last quarter. With many other regions of the world, most notably Asia and Europe, currently loosening their monetary policy, it's not a surprise to see an increase in the outlook for gold," says Mr. Atkinson. "Seasonally, this is the start of a very strong period for gold, so this might be an interesting entry point into the asset class."

Sentiment for the S&P 500 VIX Short-Term Futures™ Index remained fairly bullish for both groups. Over half of the advisors (54%) surveyed expect an increase in the VIX in Q3 compared to 49% in Q2. Investors' sentiment also rose to 44% from 43%. The VIX fell 20.1% in Q2.

"If the instability in worldwide markets continues, we would expect to see the VIX trend higher," says Mr. Atkinson.

About the Q3 2015 Advisor and Investor Sentiment Surveys

Horizons ETFs conducts the only quarterly sentiment survey of Canadian investment advisors. This was the third quarter that an additional investor sentiment survey was conducted. Both results have been collectively branded under the title 'Q3 2015 Advisor and Investor Sentiment Surveys.' The surveys quantitatively measure advisors' and investors' quarterly outlooks as it relates to key benchmarks covering equities, bonds, currencies and commodities. For full survey results, visit

About Horizons ETFs Management (Canada) Inc. (

Horizons ETFs Management (Canada) Inc. and its affiliate AlphaPro Management Inc. are innovative financial services companies offering the Horizons ETFs family of exchange traded funds. 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. Horizons ETFs has more than $4.6 billion of assets under management and with 67 ETFs listed on the Toronto Stock Exchange (as at June 30, 2015), the Horizons ETFs family makes up one of the largest families of ETFs in Canada. Horizons ETFs Management (Canada) Inc. and AlphaPro Management Inc. are members of the Mirae Asset Global Investments Group.

Horizons ETFs Management (Canada) Inc.

Commissions, trailing commissions, management fees and expenses all may be associated with an investment in exchange traded products managed by Horizons ETFs Management (Canada) Inc. (the "Horizons Exchange Traded Products"). The Horizons Exchange Traded Products are not guaranteed, their values change frequently and past performance may not be repeated. Certain Horizons Exchange Traded Products use leveraged investment techniques that can magnify gains and losses and may result in greater volatility of returns. These Horizons Exchange Traded Products are subject to leverage risk and may be subject to aggressive investment risk and price volatility risk. The prospectus contains important information about the Horizons Exchange Traded Products. Please read the prospectus before investing.

SOURCE Horizons ETFs Management (Canada) Inc.

For further information: Howard Atkinson, President, Horizons ETFs Management (Canada) Inc., (416) 777-5167,


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