Canadian Advisors Take a Shine to Gold and Stocks, Increasingly Bearish on Oil
TORONTO – April 13, 2011 - Gold, particularly gold stocks, are once again in favour with Canadian investment advisors, who are increasingly bullish on the precious metal to reach even higher levels, according to the Q2 2011 Advisor Sentiment Survey (the “Q2 Survey”) conducted by BetaPro Management Inc. (“BetaPro”).
The Q2 Survey asked Canadian investment advisors to give their outlook on 17 distinct asset classes. Advisors responded whether they were bullish, bearish or neutral on the anticipated returns for these asset classes in the next quarter. In our last quarter’s survey (the “Q1 Survey”), advisors were undecided on the direction of gold after more than two years of phenomenal performance for the asset class. Advisors in the Q2 Survey once again have high expectations for gold over the next quarter, as 51% are now bullish on the S&P/TSX Global Gold Index™ versus only 38% in the Q1 Survey and 53% are now bullish on gold bullion versus 35% in the Q1 Survey.
“After one quarter of doubt, it appears advisors once again see value in investing in precious metals. Bullish sentiment on both gold and silver was very strong in the Q2 survey,” said Howard Atkinson, President of BetaPro.
On the flip-side of things, it seems advisor sentiment on oil is weakening. In the Q1 Survey, 61% of advisors were bullish on the commodity. After a 10% rise in crude prices during the first quarter, advisors sentiment from the Q2 Survey seems mixed, with only 41% bullish and 44% bearish on the direction of oil prices. Similarly, 73% of advisors were bullish on the outlook for energy stocks in the Q1 Survey, represented by the S&P/TSX Capped Energy Index™, which returned approximately 11% for the quarter. Bullish sentiment declined by 10% in the Q2 Survey to 63%.
“With questions surrounding demand from Japan and the impact a higher oil price can have on global economic recovery, our survey shows that a larger number of advisors feel oil prices don’t have much room to grow over the next quarter,” Mr. Atkinson said.
After a quarter of healthy returns, advisors are only slightly less bullish on the broadbased equity categories. Bullish sentiment on the S&P/TSX 60™ Index remained exactly the same in both surveys at 62%. While bullish sentiment on the S&P 500® Index in the Q2 Survey dropped 11% from last quarter to 52% and bullish sentiment on the MSCI® Emerging Markets Index fell from 67% last quarter to 58% for the Q2 Survey.
“Sentiment on stocks is clearly still bullish,” Mr. Atkinson said. “While the stock market has had one of its strongest two-year period of returns in the last 70 years, it would appear advisors still think there is still more growth potential for stocks. It’s important to note that stocks are a broad asset class, so advisors may be looking to utilize more conservative equity strategies, such as increasing their holdings of mature dividend paying stocks or using covered call strategies.”
Advisor sentiment on the value of the Canadian dollar versus the U.S. dollar remains for the most part undecided much like last quarter, despite the fact that the Canadian dollar rose roughly 3% during the quarter.
“I think some people see how far the dollar has risen and they wonder how it could go much higher? Advisor sentiment seems to be neutral on the direction of the loonie right now,” said Mr. Atkinson. “In addition advisors sentiment continues to be mixed on the direction of the 30-year U.S. Treasury Bond, which would likely be impacted by a rise in interest rates but anticipated rate rises have failed to materialize.”
About half of advisors remain bullish on the prospects for base metal stocks and copper in the Q2 Survey, a slight pullback from last quarter, when 59% of advisors were bullish on the S&P/TSX Base Metals Index™ and 55% were bullish on the price direction of copper.
Advisors continued their overall winning streak in predicting the direction of markets. Last quarter, they accurately predicted the direction of 10 asset classes out of the 16 surveyed.
“Since the inception of this survey, advisors have generally been accurate in predicting the direction of asset classes surveyed. Interestingly, even when sentiment is mixed, like it was on the VIX Index, the returns tended to be muted or flat, possibly reflecting the lack of conviction advisors as a whole may have in the direction of a certain asset class,” Mr. Atkinson said.
This most recent survey was conducted between March 27, 2011 and March 31, 2011 and gauged the opinions of more than 130 Canadian investment advisors.
About the Sentiment Survey
BetaPro conducts the only quarterly sentiment survey of Canadian investment advisors. The survey quantitatively measures advisors' quarterly outlook as it relates to key benchmarks covering equities, bonds, currencies and commodities. Full survey results are available at http://www.horizonsetfs.com/pub/en/resources/SentimentSurvey.aspx.
About BetaPro Management Inc. (www.betapro.ca)
BetaPro manages the Horizons BetaPro family of exchange traded funds, a broadly diversified range of investment tools with solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. The Horizons BetaPro ETFs include several types of structures: single, inverse, leveraged, inverse leveraged and spread ETFs. BetaPro is a subsidiary of Jovian Capital Corporation (JOV:TSX), with assets under management (“AUM”) of approximately $2.3 billion as of March 31, 2011, amongst 47 ETFs. Its subsidiary, AlphaPro Management Inc., Canada's largest provider of actively-managed ETFs, has approximately $600 million of AUM as of March 31, 2011. Together under the Horizons ETFs brand, the two companies have 70 TSX listings with more than $2.9 billion of AUM as of March 31, 2011.
For further information:
Howard Atkinson, President, BetaPro Management Inc.
(416) 777-5167, hatkinson@betapro.ca
