Advisors more bullish than investors in Q4
Horizons ETFs surveys show Canadian advisors anticipate more volatility than investors, but are still more optimistic about most major asset classes
TORONTO, Oct. 30, 2014 /CNW/ - Heading into the fourth quarter of 2014 ("Q4"), Canadian investment advisors were more bullish than Canadian investors in 13 out of 15 asset classes, particulary on Canadian and U.S. stocks, according to the Q4 Advisor and Investor Sentiment Surveys ("Q4 Surveys") conducted by Horizons ETFs Management (Canada) Inc. ("Horizons ETFs"). This was the first time Horizons ETFs measured investor sentiment in a separate survey from its ususal quarterly Advisor Sentiment Survey.
The Q4 Surveys asked both advisors and investors for their expectations on 15 distinct asset classes — bullish, bearish or neutral — on the anticipated returns for these asset classes in the upcoming calendar quarter (Q4).
For Q4, 69% of advisors said they were bullish on the S&P 500®, up from the 57% of advisors that expressed bullish sentiment in the Q3 Advisor Survey. Of the 15 asset classes, bullishness for the S&P 500® rose the most among advisors, up 12% quarter over quarter. This was the highest rise in sentiment along with the S&P/TSX Capped Financials Index™, where bullishness also increased by 12% to 58% during the same period.
For investors, 62% expressed positive sentiment towards the S&P 500®. In terms of performance, the S&P 500® rose 0.62% during Q3, the three-month period ended September 30, 2014. Since October 1, the S&P 500® was up 0.55%, as at October 28, 2014.
"Given the recent market volatility the S&P 500® has experienced, and the positive sentiment at the time the survey was conducted, the overall results highlight how quickly market conditions and sentiment can change," said Howard Atkinson, President of Horizons ETFs. "This is a great opportunity for investors to re-examine their diversification strategies, and whether or not their portfolios can handle increased volatility."
Looking at domestic markets, bullish sentiment for S&P/TSX 60™ Index remained relatively flat for advisors, rising to 62%, up 1% from last quarter. Investors were more cautious on their outlook with just over half (53%) stating they were bullish on the Index.
One of the most notable findings in the survey was the discrepancy in sentiment between advisors and investors for the S&P 500 VIX Short-Term Futures™ Index. Just over half of advisors (51%) expect to see a higher VIX Index at quarter-end compared to 37% of investors. Over the course of Q3, the S&P 500 VIX Short-Term Futures™ Index rose 9.84%.
"The difference in sentiment around the VIX suggests that advisors anticipate volatility rising in the market, but remain optimistic about overall long-term stock returns," said Mr. Atkinson.
Energy stocks and miners experienced the largest declines in positive sentiment. Heading into Q4, 55% of advisors were bullish towards the S&P/TSX Capped Energy Index™ compared to the 70% who were bullish last quarter. This was the sharpest drop in sentiment followed by the S&P/TSX Global Base Metals Index™, where advisor sentiment declined 14 percentage points, down to 26% from 40% last quarter. During Q3, the S&P/TSX Capped Energy Index™ returned -12.38%.
Of the commodities, investors expressed the most positive sentiment towards natural gas at 65%, compared to advisors at 58%. Advisor bullish sentiment also increased in this area by 10 percentage points, up from 48% last quarter.
"The drop in sentiment for commodities coincides with the dip in oil prices we have seen since June, with barrels of West Texas Intermediate (WTI) Crude Oil falling to below 85 dollars a barrel," said Mr. Atkinson. "The devalaution of oil could also be a factor impacting the demand for the Canadian dollar."
Bearishness towards the Canadian dollar versus the U.S. dollar increased, where 59% of advisors – compared to 44% last quarter - indicated they were bearish. More than half (52%) of investors were bearish on the loonie.
For Q4, only 34% of advisors were bullish on gold bullion, compared to the 46% that expressed positive sentiment last quarter. Investor sentiment for gold bullion was comparable at 32%. Similarly for the gold stocks, 35% of advisors were bullish on the S&P/TSX Global Gold Index™ heading into Q4, a large decline of 11 percentage points from the 46% that were bullish last quarter. For Q3, the S&P/TSX Global Gold IndexTM had a total return of -15.26%%, while gold bullion returned -8.98%.
"We might see gold come back if the equity market selloff continues. Gold is typically inversely correlated to stocks and was one of the few asset classes that did well during the financial crisis in 2008/2009," said Mr. Atkinson.
About the 2014 Advisor and Investor Sentiment Surveys
Horizons ETFs conducts the only quarterly sentiment survey of Canadian investment advisors. This quarter, an additional investor sentiment survey was also conducted. However, both results have been collectively branded under the title '2014 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 $4.7 billion of assets under management and with 72 ETFs listed on the Toronto Stock Exchange (as at October 15, 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.
Howard Atkinson, President, Horizons ETFs Management (Canada) Inc., (416) 777-5167, [email protected]
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