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Canadian advisors and investors are overwhelmingly bullish across most market indexes and asset classes, with energy coming out on top, according to the third-quarter 2021 advisor and investor sentiment surveys from Horizons ETFs Management (Canada) Inc.

Both advisors and investors ranked energy as their most bullish asset class, after the S&P/TSX Capped Energy index was the second quarter’s best performing equity index as measured by the sentiment surveys (about a 20% return).

Advisors added five percentage points to bring their total bullishness on energy to 64%, while investors added 11 percentage points of positive sentiment, for a total bullishness of 62%.

“Now that global travel opportunities and transport of goods globally are increasing, energy demand is on the rise, which has resulted in strong performance for Canada’s energy sector,” said Mark Noble, executive vice-president of ETF Strategy with Horizons ETFs, in a release.

Canadian financials were also a strong performer in the second quarter, with the S&P/TSX Capped Financial index returning 7.38% in the period. While advisors and investors remained bullish overall, both surveyed groups tempered their positive sentiment, with advisors reducing their bullishness 10 percentage points to 63%, and investors retracting six percentage points to stand at 53% bullishness on financials.

Emerging markets was the third most bullish sector for advisors, at 61%, a four percentage point drop from the previous quarter. In comparison, investors reduced their positive sentiment by nine percentage points to 49% overall. As such, emerging markets was “one of the largest gulfs” between advisor and investor sentiment, the release said. The MSCI Emerging Market index returned 4.42% in Q2.

Advisors and investors also decreased their bullishness on Canadian equities, as represented by the S&P/TSX 60, though they remained bullish on the asset class overall. Advisors were 59% bullish, a drop of 14 percentage points, while investors were 53% bullish, a drop of seven percentage points.

Bullishness on U.S. equities continued, though sentiment pulled back on the S&P 500 index.

During Q2, the S&P 500 returned more than 8%, and the Nasdaq-100 returned more than 11%.

In response, advisors took back 13 percentage points of positive sentiment to sit at 56% bullishness on the S&P 500. On the Nasdaq-100, their bullishness increased six percentage points to 59%. For investors, those figures were 56% and 53% bullish.

“U.S. equities appear to have much higher valuations than other geographic sectors, which is likely why we see advisors strongly favouring non–North American equities, which have lower relative valuations and might benefit more from a broader global recovery in the second half of 2021,” Noble said.

On the loonie versus the U.S. dollar, advisor bullish sentiment grew five percentage points to 39%, though sentiment was 40% neutral overall. Investors registered a nine percentage point drop in positive sentiment, landing at an overall neutral standing of 36%, with bearishness not far behind at 35%.

Bearishness on fixed income continued: advisors added three percentage points to their bearish score to total 35%, but were neutral overall (42%) on the fixed-income index (Solactive 7–10 Year Treasury Bond). Investors added four percentage points of negative sentiment to be 38% bearish.

Thematic asset classes

After being bullish on bitcoin in Horizons’ Q2 survey, investors did an about-face, turning bearish on the world’s most popular cryptocurrency. During the second quarter, Bitcoin’s price dropped more than 41%, and investors were 50% bearish on the asset — a drop of 15 percentage points compared to the previous quarter.

Advisors doubled down on their bearish Bitcoin position, adding nine percentage points for a total of 54% bearishness.

On the Canadian marijuana industry, investors were 46% bullish, though this was a 20 percentage point drop in positive sentiment compared to the previous quarter. The North American Marijuana index lost more than 11% during the second quarter, though is still positive year-to-date. Advisors moved to a 35% neutral majority, having been bullish in the Q2 survey.


Both advisors (46% bullish, up nine percentage points) and investors (51% bullish, up 12 percentage points) upgraded their bullishness on natural gas futures, which was the best performing asset class in Q2 as measured by the survey (nearly 40%).

Bullishness for crude oil futures also increased: advisors were 57% bullish (up five percentage points) and investors were 61% bullish (up eight percentage points).

“Commodities have proven the adage they are one of the best solutions in an inflationary environment,” Noble said. “The added tailwinds of a global reopening following mass vaccinations against the Covid-19 environment add further fuel to their ascent.”

For full details, consult the advisor and investor sentiment surveys.