The latest investor and advisor sentiment surveys from Horizons ETFs Management (Canada) Inc. show investors and advisors have very divergent views when it comes to their outlooks for the quarter ahead. Horizons ETFs released their first quarter 2021 Advisor and Investor Sentiment surveys January 21.
According to the surveys, which measure the bullish and bearish sentiment advisors and investors have about 14 distinct asset classes, investors were most bullish about Canadian equities and Canadian energy. Investors awarded one of the largest quarter-over-quarter increases in bullish sentiment to Canada’s major equities benchmark, the S&P/TSX 60 Index, and the largest quarter-over-quarter increase in bullish sentiment to the Canadian energy segment of the survey. All told, confidence among investors about Canadian equities rose 19 per cent to 56 per cent overall, while their bullishness about energy rose 25 per cent to 52 percent bullishness overall.
Advisors on the other hand, remained doubtful about their bullish outlook, which fell 13 per cent to 48 per cent overall for equities. For energy, advisor bullishness rose by just three per cent, to 29 per cent overall.
In financials, investor bullishness moved higher with performance, rising 22 per cent to 52 per cent bullishness overall. Investors were bearish about the sector in the fourth quarter in 2020. Advisors remained skeptical, the company adds, with bullish sentiment about financials declining one per cent to 45 per cent.
Investors were also confident about U.S. indices while advisors remained more conflicted about their outlook – after identifying the NASDAQ-100 as their top bullish index in the fourth quarter of 2020, advisor confidence pulled back 16 per cent in the first quarter of 2021, to 48 per cent overall. Of the 14 indices and asset classes measured, advisors say they were most confident about the S&P 500, increasing their sentiment scores nine per cent to 69 per cent overall.
Regarding international equities, meanwhile, investors were 18 per cent more bullish than they were in the surveys conducted in the fourth quarter of 2020. Their overall bullish score for the category sits at 59 per cent overall, while advisor sentiment about international equities, previously at 59 per cent, fell slightly to 57 per cent overall.
The survey also measures sentiment about commodities, fixed income and marijuana stocks.
Two metrics where investors and advisors were in agreement included the outlook for the Canadian dollar versus the U.S. dollar and an unenthusiastic outlook for U.S. treasuries. Both investors and advisors left bearish sentiments about the Canadian dollar behind this quarter, adding six per cent and 10 per cent to their bullish ratings which settled at 37 per cent bullishness and 41 per cent bullishness, respectively. As for U.S. treasuries, investors reduced their bullishness two per cent to settle at just 18 per cent overall, while advisors removed six per cent to sit at eight per cent bullishness about the asset class overall.
Mark Noble, Horizons ETFs executive vice president of ETF strategy says with 2020 in the rear-view mirror, many Canadians are optimistic about the new year, while their advisors remain more cautious. “Despite more caution, advisors are still primarily bullish on the prospects of a Canadian recovery, but might be taking the view that valuations have run a bit ahead of an actual recovery,” Noble adds.