Horizons ETFs' surveys show nearly three out of four Canadian advisors are bullish on U.S. equities compared to only 60% of Canadian investors
TORONTO, Jan. 29, 2015 /CNW/ - Heading into the first quarter of 2015 ("Q1"), more Canadian investment advisors were bullish than Canadian investors in nine out of 15 asset classes, particularly on U.S. stocks and commodities, according to the Q1 2015 Advisor and Investor Sentiment Surveys ("Q1 Surveys") conducted by Horizons ETFs Management (Canada) Inc. ("Horizons ETFs").
The Q1 Surveys asked both advisors and investors for their expectations of returns on 15 distinct asset classes — bullish, bearish or neutral — in the upcoming calendar quarter (Q1, 2015).
For Q1, 74% of advisors said they were bullish on the S&P 500®, up from the 69% of advisors who expressed bullish sentiment in the last quarterly survey. The S&P 500® had the second largest disparity in sentiment of the asset classes being surveyed, with a 15% gap between advisors and investors in bullishness, and only 59% of investors were bullish this quarter, a drop from the 62% of investors that were bullish last quarter. A similar 14% gap in bullish sentiment occurred with the NASDAQ-100® Index, where 76% of advisors were bullish versus 62% of investors.
In terms of performance, the S&P 500® rose 4.39% during Q4, 2014, and since then, is down 2.12% year-to-date, as at January 14, 2015. The NASDAQ-100® Index rose 4.61% during Q4 and has since fallen 2.13% for the year-to-date, as at January 14, 2015.
"Given the S&P 500®'s rally in the last quarter and the end of quantitative easing, our survey results indicate that advisors expect the momentum to continue, while investors remain cautious and less trusting of the signals of true recovery," said Howard Atkinson, President of Horizons ETFs. "Canadian investors seem somewhat more focused on our domestic markets; this is an opportunity for advisors to continue communicating the importance of diversification and investing outside of Canada."
Looking at domestic markets, bullish sentiment for the S&P/TSX 60™ Index fell slightly among advisors to 57% in Q1 from 62% last quarter (Q4), meanwhile, it remained flat for investors at 53% who remained more cautious in their outlook.
Of the commodities, advisors and investors greatly diverged in sentiment for crude oil in the Q1 Surveys, with 57% of advisors bullish for the asset class and only 41% of investors echoing similar sentiment. Compared to last quarter, advisor sentiment was bullish for oil prices, increasing to 57% from 51% in the Q1 Surveys, while investor bullish sentiment fell seven percentage points to 41% from 48%. The spot price of crude oil fell 41.28% to US$53.27 from US$90.73 for Q4, the three-month period ended December 31, 2014.
Also in regards to commodities, natural gas showed the largest declines in bullish sentiment among both advisors and investors. Advisors bullishness towards the asset class fell 10 percentage points to 48% from 58%, and for investors the decline was 19 percentage points, where 44% were bullish in Q1, compared to the 65% that were bullish in Q4.
"The decline in crude oil has been accompanied by deflated natural gas prices," said Mr. Atkinson. "Both investors and advisors seem to expect further declines to occur over the next three months."
Bearishness towards the Canadian dollar versus the U.S. dollar also fell slightly, where 50% of advisors — compared to 59% last quarter — indicated they were bearish. More than half (52%) of investors were bearish on the loonie. The Canadian dollar fell 3.54% over Q4 and continues to fall lower so far in 2015.
Energy stocks and miners experienced the largest rise in bullish sentiment from investors, meanwhile advisor sentiment for those sectors remained flat. Heading into Q1, investor bullish sentiment towards the S&P/TSX Capped Energy Index™ rose 12 percentage points, up from 41% last quarter. Overall, the S&P/TSX Capped Energy Index™ was one of the only sectors where positive sentiment was equal between advisors and investors at 53%. Meanwhile, advisor bullishness towards this index slightly declined from the 55% that were bullish in Q4.
"It seems that advisors are split on the direction of the Canadian dollar. If we do see a comeback in oil prices, it would likely have a positive effect on the Canadian dollar," said Mr. Atkinson. "Both advisors and investors appear to be bullish on energy equities, which suggests they may feel the worst is over in the energy market decline."
One of the most notable findings in the survey was the drop in advisor sentiment for the S&P 500 VIX Short-Term Futures™ Index. Advisor bullish sentiment for the VIX fell 12 percentage points down to 39%, compared to last quarter, where over half of the advisors (51%) were positive on the index. Investors echoed advisors' sentiment with only 40% bullish on the index.
"Advisor and investor sentiment around the VIX indicates that both advisors and investors continue to anticipate volatility in the North American equity markets," said Mr. Atkinson.
For Q1, there was no change in bullish sentiment towards gold bullion among advisors, which remained at 34% compared to last quarter. Investor sentiment was slightly more bullish at 39%, a slight increase compared to the 32% who expressed bullish sentiment last quarter.
Similarly, for gold stocks, 34% of advisors were bullish on the S&P/TSX Global Gold Index™ heading into Q1. Investors bullish sentiment was on par with advisors also at 34%, compared to the 30% expressed last quarter.
About the Q1 2015 Advisor and Investor Sentiment Surveys
Horizons ETFs conducts the only quarterly sentiment survey of Canadian investment advisors. This was the second quarter that an additional investor sentiment survey was conducted. Both results have been collectively branded under the title 'Q1 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 http://www.HorizonsETFs.com/sentimentsurvey.
About Horizons ETFs Management (Canada) Inc. (www.HorizonsETFs.com)
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 72 ETFs listed on the Toronto Stock Exchange (as at December 31, 2014), 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.
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, [email protected]