Advisors are more optimistic than their investors about the prospects of a broader market recovery in the final months of the year, this according to the most recent advisor and investor sentiment surveys conducted by Horizons ETFs Management (Canada).
The fourth quarter surveys examine investor and investment advisor opinions and expectations for 14 distinct asset classes in the final quarter of 2020.
In Canada, advisors are increasingly bullish about Canadian equities and the dollar, increasing their bullish rating by 16 per cent to 61 per cent, the second highest rated asset class this quarter. Investors, meanwhile, remain wary – their bearishness outstripped bullishness, leaving their bearish rating at just 38 per cent overall. Both advisors and investors were pessimistic about energy – advisor bullishness dropped 10 per cent, resulting in an equal split of bullishness and bearishness, while investors increased their bearish rating by eight per cent, bringing their rating to 51 per cent bearishness overall.
Advisor confidence in Canadian financials grew five per cent to 46 per cent, while investors decreased their bullish rating by two percentage points to 30 per cent.
Steve Hawkins, president and CEO of Horizons ETFs says “the divergence between advisors and investors is interesting and could be explained by advisor fixation on market performance while investors “bake in” their personal experiences with unemployment, gas consumption, mortgage deferrals and other timely economic indicators into their outlook equation.”
American equities
In looking at American equities, advisor confidence increased 12 per cent to 60 per cent overall. Investors again were more hesitant, and did not record any sentiment gains or losses. Internationally, advisors were overwhelmingly bullish, adding 17 per cent to their bullish score for international equities, bringing their sentiment score for the category to 59 per cent bullishness – the largest sentiment jump of any category this quarter. Investors also increased their bullish score on the category, adding seven per cent, raising their bullish score to 41 per cent.
As for commodities, both advisors and investors were concerned, significantly decreasing their bullish attitudes by 12 per cent and 14 per cent respectively, to 39 per cent bullishness for advisors and 35 per cent bullishness for investors. Both advisors and investors were positively bullish on natural gas futures, however. Advisors increased their positive sentiment by four percentage points to 44 per cent overall, while investors added 21 per cent to their bullish score, bringing that score to 54 per cent bullishness overall, the largest category gain for the quarter.
Gold, silver and fixed income
Finally, in gold, silver and fixed income, advisors and investors were increasingly bullish about gold and silver, but decidedly less optimistic about U.S. treasuries. Advisors increased their bullishness about gold bullion by five per cent to 59 per cent overall, while investor sentiment increased six per cent to 65 per cent overall. Silver followed suit with advisor sentiment increasing two per cent to 50 per cent and investor sentiment jumping 10 per cent to 60 per cent overall. In U.S. treasuries, investor bullishness decreased six per cent to just 20 per cent overall. Advisors were even more pessimistic, reducing their outlook by four per cent to 14 per cent bullishness overall.
