SURVEY: Canadian Investors & Advisors Overwhelmingly Bearish On Q1 2022

Published: January 14, 2022

SURVEY: Canadian Investors & Advisors Overwhelmingly Bearish On Q1 2022

Heading into 2022, both Canadian investors and advisors have shifted overwhelmingly toward bearish sentiment across most market indices and asset classes, according to the first-quarter 2022 Advisor and Investor Sentiment Surveys (“Q1 Surveys“) from Horizons ETFs Management (Canada) Inc. (“Horizons ETFs“).

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 January 1, 2022, and ending March 31, 2022.

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 Canada’s licensed producers, which continue to struggle to generate a profit in Canada’s heavily regulated and hyper-competitive retail cannabis market,” said Mark Noble, Executive Vice President, ETF Strategy, at Horizons ETFs. Many new investors invested in Bitcoin and related funds in 2021, so it will be interesting to see how volatility in this emerging asset class affects flows. Volatility marked the end of 2021 and with signs that it will likely continue into the new year, there may be growing concern about Bitcoin’s ability to function as a ‘digital gold’ to provide a non-correlated store of value during periods of equity market instability.

About Horizons ETFs Management (Canada) Inc. (www.HorizonsETFs.com)
Horizons ETFs Management (Canada) Inc. is an innovative financial services company and offers one of the largest suites of exchange traded funds in Canada. The Horizons ETFs product family includes a broadly diversified range of solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. Horizons ETFs currently has more than $20 billion of assets under management and 104 ETFs listed on major Canadian stock exchanges.

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