Advisors and investors are showing renewed confidence in cannabis, U.S. equities and emerging market asset classes, according to a survey from Horizons ETFs Management (Canada) Inc.
Horizons’ second quarter 2019 sentiment survey saw advisors and investors express bullish expectations for 10 of 14 asset classes following first-quarter gains in the majority of indices the firm tracks.
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The cannabis space was especially popular with investors, who reported 70% bullishness, up 14% from the previous quarter after the North American Marijuana Index posted a 54.55% return. Advisors were more cautious about cannabis, increasing their support to 47% (up from 31%).
U.S. equities were also a source of confidence, particularly among advisors, following first-quarter rallies by the S&P 500 Index and the Nasdaq-100 Index. Advisors favoured theNasdaq with 67% bullishness following 16.57% growth in the Nasdaq’s performance. Advisors downgraded their confidence in the S&P 500 by 5% to 62%, but the S&P 500 still had the third-highest overall rating among advisors.
Investors increased their confidence in the Nasdaq to 54% (up from 41% in the previous quarter), and close to half were bullish on the S&P.
Both advisors and investors were “overwhelmingly neutral” on the U.S. bond outlook, despite 2.85% growth in the performance of the U.S. 7-10 Year Bond Index, Horizons said.
Confidence was also high in emerging markets, with advisors again leading the way, after the MSCI Emerging Market Index saw a 9.91% performance gain in the first quarter. Advisors increased their confidence in the space by 18% to a 66% bullish rating, while investors increased theirs by 8% to 45% bullish.
The outlook for Canadian equities was mixed, in spite of improved performance on all of the tracked Canadian equity indices, including a 12.54% Q1 return for the S&P/TSX 60 Index. Advisors downgraded their confidence by 7% to a 50% bullish outlook, while investors increased their bullishness by 7%.
Advisors and investors alike showed less optimism about Canadian banks, with advisors downgrading their confidence by 14% and investors downgrading theirs by 6%, with both parties almost equal in their bullish and bearish sentiments. The energy sector saw a 3% boost in confidence from advisors and an 8% boost from investors, with both sides remaining bullish.
The overall increase in advisor and investor confidence comes amid skyrocketing returns from the TSX and S&P 500. The S&P/TSX composite index set a record on Friday by closing at 16,612.81 points, up from the previous record close set last July. On the same day, the S&P 500 closed within 1% of its all-time high.
Read the full report from Horizons here.