Most advisors bullish on stocks for Q4

More than 60% of Canadian advisors expect Canadian and U.S. equities to deliver positive returns for Q4 2016, according to the latest advisor sentiment survey conducted by Horizons ETFs.

The survey asked advisors for their return expectations — bullish, bearish or neutral — on 14 distinct asset classes for the upcoming fourth quarter.

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The highest bullish sentiment among advisors (63%) was for the S&P/TSX 60. With Canada being one of the world’s best-performing domestic equity markets in 2016, the S&P/TSX 6o was up by more than 5% last quarter and by more than 14% year-to-date.

Other survey highlights:

• More than half of advisors (59%) are bullish on the S&P/TSX Capped Energy, which gained more than 5% last quarter.
• About half of advisors (52%) are bullish on the S&P/TSX Capped Financials (44% were bullish in Q3).
• On the S&P 500, 61% of advisor are bullish; on the Nasdaq-100, 63%.

“U.S. stocks are trading at very high valuations — essentially the highest since the tech bubble of the early 2000s,” says Steven Hawkins, president and co-CEO at Horizons ETFsHawkins, in a release.

“This really hasn’t slowed down advisor bullishness for U.S. equities, which has remained high all year. Fundamentally, the U.S. economy is on much better footing than most other developed nations. For Canadian investors, the big question is whether or not to hedge this exposure. Going into September, we saw about a 4:1 ratio of ETF assets favouring currency hedged exposure, according to data from Investor Economics,” he says.

• On the direction of the loonie, which lost about 1.55% in Q3, 33% of advisors are bullish; 27% are neutral.
• On U.S. 7 to 10 year bonds, 46% of advisors are bearish; 35% are neutral.
• Only 28% of advisors report being bullish on the loonie versus the U.S. dollar.
• On emerging markets, 52% of advisors are bullish.

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Horizons ETFs conducts the survey each quarter. Full results are available online.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.