Across most asset classes, previously bullish investors & advisors are now bearish heading into Q1 2022
Every quarter, Horizons ETFs surveys Canadian investors and investment advisors for their outlook on expected returns for distinct asset classes. These expectations are expressed in terms of bullish, bearish or neutral sentiment. The Q1 Surveys cover the period beginning
Thematic Asset Classes and Sectors: Bitcoin, Psychedelics and Marijuana
Despite a 6.67% return on the spot price of Bitcoin, bullish sentiment amongst advisors and investors on the world's most popular cryptocurrency decreased substantially. Bullish sentiment amongst investors declined more than 14 percentage points so that only 38% of investor respondents remain bullish on the cryptocurrency. Advisors' sentiment declined as well, with the number of advisors bullish on Bitcoin decreasing by 11 percentage points down to 42% bullishness.
After a promising start in 2021, marijuana companies, as represented by the North American Marijuana Index, continued their multi-quarter slide in performance with a -19.91% return in Q4 2021. Advisors and investors have responded in kind, ranking the marijuana sector as one of their most bearish sectors for Q1 2022. Investors gave pot stocks a 42% bearish rating – a 14 percentage point increase. Advisors followed suit, increasing by 19 percentage points to 44% bearishness overall.
Heading into 2022, advisors and investors are both bearish on the prospects of the emerging psychedelics industry following a -32.47% return in the previous quarter on the North American Psychedelics Index. Advisors, previously bullish on the psychedelics space, increased their bearish sentiment 19 percentage points to 44% bearishness. Investors increased their bearish sentiment on the sector by 6 percentage points to 34% bearishness.
"After a promising start for marijuana equities at the beginning of 2021, as well as emergence of the psychedelics industry as an investable sector, unfortunately, investors' hopes for these sectors did not match performance results. This weighed on outlooks for the year ahead, particularly for
During Q4 2021,
Energy stocks, as represented by the S&P/TSX Capped Energy Index, registered a +13.26% return in Q4 2021 – the highest quarter-over-quarter return of the measured asset classes in Horizons ETFs' Q1 Surveys. Both groups tempered their expectations with investors dropping 15 bullish percentage points to 40% bullishness, and advisors dropping a staggering 20 percentage points of bullish sentiment down to 44% bullishness.
Financials, as represented by the S&P/TSX Capped Financials Index, posted a strong return of +8.38% in the fourth quarter of 2021. Once again, investors and advisors both decreased their bullish sentiment on the performance potential of Canadian banks in the new year. Advisors' bullish sentiment fell 8 percentage points to 45% bullishness, while investors' bullish sentiment slid by 6 percentage points to 40% bullishness.
On the Canadian dollar vs. the
"There has been a remarkable reversal of sentiment on the Canadian outlook heading into 2022," said
Q4 2021 saw robust growth in
Despite the gains, reception and outlook on American equities fell sharply, according to our Q1 Surveys.
Advisor sentiment on the S&P 500® darkened following an 11 percentage point decrease, to 41% bullishness, as compared to the previous quarterly survey. On the NASDAQ-100®, advisors registered a 13 percentage point decrease in sentiment to 39% bullishness.
Investor optimism about prospects south of the border waned as well. On the S&P 500®, investors' bullishness fell to just 39%, an 11 percentage point decrease in bullish sentiment from last quarter. On the tech-heavy NASDAQ-100®, investors withdrew 12 percentage points of bullish sentiment, landing at 40% bullishness.
International equities, as represented by the MSCI Emerging Markets Index, were weak in Q4 2021 falling by -1.68%. In response to the weaker performance, both advisors and investors were somewhat cynical on these global markets with investors' bullish sentiment decreasing by 6 percentage points to 34% bullishness, while advisors' bullish sentiment decreased by 8 percentage points to 43% bullishness.
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Commodities
After multiple quarters of strong performance within the crude oil market, the positive momentum of crude oil futures slowed in Q4 2021 posting a gain of just +0.24%. As one of their highest bullish conviction asset classes last quarter at 69% bullishness, heading into Q1 2022 advisors have decreased their bullish sentiment by 29 percentage points to 40% bullishness.
Investors also highlighted their doubts in continued demand for crude oil by decreasing their bullish sentiment by 15 percentage points to 39% bullishness.
Among the asset classes and indices measured by our Q1 Surveys, natural gas futures saw the greatest decline in performance with a -36.42% return in Q4 2021. Advisors and investors both saw a likely cooling for the commodity's fortunes heading into 2022 with investors reducing their outlook to 41% bullishness, a 21 percentage point drop in bullish sentiment compared to last quarter. Advisors, who ranked natural gas futures as one of their highest conviction asset classes last quarter at 69% bullishness, are now seemingly cold on the commodity decreasing their bullish sentiment by 21 percentage points to 38% bullishness.
"2021 was a wild ride for commodities markets. With oil and natural gas posting multi-year highs despite the ongoing COVID-19 pandemic, commodities proved to be an effective hedge against growing global inflation concerns." said
Defensive Asset Classes: Gold, Silver and Fixed Income
Amid the year-end volatility that brought 2021 to a close, precious metals proved a stable store of value in Q4 2021, with both gold bullion gaining +4.11% and silver bullion rising +5.13% in the quarter.
Investors registered a 3 percentage point drop in bullish sentiment to 40% bullishness on gold bullion. Advisors were also more bearish on the precious metal after decreasing their bullish sentiment by 15 percentage points to just 37% bullishness.
Similarly, on silver bullion investors registered a 6 percentage point drop in bullish sentiment to 37% bullishness, while advisors again moved from bullish last quarter to bearish, reducing their bullish sentiment by 13 percentage points to just 35% bullishness.
On the S&P/TSX Global Gold Index, Q4 2021 saw double digit performance from gold miners with a +10.72% return overall. Investors dropped 9 percentage points of bullish sentiment to just 36% bullishness while advisors were decisively more cynical this quarter decreasing their bullish sentiment by 8 percentage points to 40% bullishness.
Low interest rates continue to underwhelm fixed income markets.
"The acknowledgement that the stimulus-driven inflation wasn't necessarily transitory by Fed Chairman
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