After a year of favouring defensive investments, advisors’ and investors’ sentiments have shifted heading into a new decade.
The latest Advisor and Investor Sentiment Survey from Horizons ETFs Management (Canada) Inc., published on Wednesday, found that 2020 began with both advisors and investors optimistic about equity investments across the globe.
Confidence in Canadian equities continues to rise
The survey found that advisors registered a 10% increase in bullishness on the S&P/TSX 60 index, alongside a 16% increase in bullishness on Canadian energy, making energy advisors’ strongest position on the Canadian equity index.
However, advisors’ bullishness decreased two percentage points toward Canada’s banks.
Investors boosted their bullish sentiments on all fronts for Canadian equities, including by 7% for the S&P/TSX 60 index, 8% for Canadian energy and 6% for Canadian banks.
“With continued momentum in Canada’s energy industry, solid bank earnings and a stronger global trade outlook, both advisors and investors are optimistic about most Canadian equity categories,” Steve Hawkins, president and CEO of Horizons ETFs, said in a statement.
Sentiment also improved on equities south of the border as both advisors and investors responded to the the S&P 500 and NASDAQ-100’s recent record-breaking advances.
Emerging market sentiment skyrocketed, with advisors increasing their bullishness to 63% from 37% — their largest bullish rating increase among all indexes and asset classes surveyed this quarter. Investors increased their bullishness on emerging markets by 18 percentage points to 48%.
Sentiment declines for precious metals, fixed income
While investors and advisors’ feelings on precious metals remained optimistic, both groups lowered their bullishness toward the asset classes in Q1 2020. Advisors reduced their bullish sentiment by 12 percentage points to 45% and investors by six percentage points to 54%.
On the fixed-income front, the outlook for U.S. Treasury bonds, as measured by the Solactive US 7-10 year treasury bond index, decreased to new lows, with advisors reporting just 17% bullishness — their lowest sentiment score of the survey.
“Despite record-breaking equity performance in 2019, ETF investors preferred investing in fixed income and gold – a clear sign of the economic anxiety and recession fears that lingered through the year,” said Hawkins. “However, after a strong finish to the decade, it appears advisors and investors are moving away from their defensive posture and are signalling their confidence once again.”
Advisors and investors split on pot stocks
Investors were hopeful for the cannabis sector’s recovery in 2020, raising their bullishness to 46%, up three percentage points since last quarter. Advisors were less optimistic, decreasing their bullishness to 31% overall, with 55% of advisors bearish on the future of pot stocks.