In its quarterly survey of Canadian investors and advisors, Horizons ETFs Management (Canada) Ltd. has found investors and their advisors are generally bullish about commodity prices, Canadian equities and even U.S. equities, despite the fact major U.S. indices declined in the first quarter of 2022.
Expressed in terms of bullish, bearish or neutral sentiments, the outlook surveyed investors and advisors to get their expectations about a number of distinct asset classes.
In the first quarter of 2022, natural gas futures were the best performing of all the asset classes covered in the survey, posting a 51.26 per cent return. Bullish sentiment among investors increased seven percentage points to 48 per cent bullishness while advisor sentiment climbed 13 per cent to 51 per cent bullishness overall.
Both investors and advisors were similarly bullish on crude oil, adding 15 percentage points and six percentage points to their bullish sentiment scores.
Lithium, meanwhile, achieved a 75 per cent bullishness rating from investors – a 32 per cent increase – following returns in the Solactive Global Lithium Producers Index of 21.60 per cent. “Advisors were more cautious, reducing their bullishness by five percentage points to 40 per cent bullishness,” Horizons ETFs states in an announcement about the survey’s release.
Mark Noble, executive vice president of ETF strategy with Horizons ETFs says “while oil and natural gas – the traditional energy commodities – continue to be impacted by shortages, sanctions and supply chain disruption, we’re simultaneously seeing increased demand for their replacements: uranium, lithium and hydrogen – fuels of the future. In particular, the rising cost of gasoline has accelerated electric vehicle adoption, elevating the demand for lithium even further.”
In looking at indices, they add that the S&P/TSX 60 Index grew just 2.77 per cent, but both investors and advisors are optimistic about the market. Investors increased their bullish sentiment 14 per cent to 53 per cent overall, while advisors added eight per cent to reach 48 per cent bullishness overall.
In energy stocks, advisors withdrew one percentage point from their bullish sentiment scores about the asset class while investors added 27 per cent. Similarly, they say “investors and advisors differed on what the quarter ahead holds for Canada’s banks. Investors decided to add 13 percentage points of bullish sentiment to 53 per cent bullishness overall.” Advisors, meanwhile, withdrew to a score of just 44 per cent bullishness on the financial index.
While U.S. markets declined in the first quarter, investors remained upbeat, adding seven per cent to their bullish sentiment scores for the S&P 500 and nine per cent to their bullish scores for the NASDAQ-100. Advisors remained split on the S&P 500 with equal bullish and bearish scores. Investors also downgraded their outlook on international equities with investor’s bearish sentiment increasing six per cent to 41 per cent bearishness, while advisors added one per cent to their bullishness score, for a bullish sentiment of 44 per cent overall.
