More than 60% of Canadian advisors are bullish on Canadian stocks going into Q4

TORONTO, October 26, 2016 — Canadian investment advisors expect Canadian and U.S. equities to continue to deliver positive returns for the fourth quarter of 2016, according to the Q4 2016 Advisor Sentiment Survey (“Q4 Survey”) conducted by Horizons ETFs Management (Canada) Inc. (“Horizons ETFs”).

The Q4 Survey asked Canadian investment advisors for their expectations of returns – bullish, bearish or neutral – on 14 distinct asset classes for the upcoming fourth quarter (Q4 2016).

The highest bullish sentiment among advisors was for the S&P/TSX 60™ Index. Nearly twothirds (63%) of Canadian advisors were bullish on broad Canadian equities going into the fourth quarter. Canada has been one of the world’s best-performing domestic equity markets in 2016. The S&P/TSX 60™ Index was up by more than 5% last quarter and by more than 14% year-todate.

Canada has been a great equity market to be invested in during 2016,” said Steven Hawkins, President and Co-CEO at Horizons ETFs. “The equal-weighted version of the S&P/TSX 60 – the S&P/TSX 60 Equal Weight Index – is up by almost 20% due to its higher weighting in two of the top-performing sub-sectors: commodities and energy. Much of the performance in Canadian stocks has been on the heels of a strong performance in gold stocks and energy stocks.

Over half of advisors (59%) were bullish on the S&P/TSX Capped Energy Index – whereas bullish sentiment on gold stocks decreased from 52% last quarter to 48% this quarter. The energy stock index gained 5.47% last quarter, while the gold index declined 6.08%. Sentiment on the underlying commodities was also similar, with 60% of advisors bullish on crude oil, while 49% were bullish on gold bullion.

The sentiment on these two indices is really not all that surprising” said Mr. Hawkins. “OPEC’s decision in late September to cut oil output was a big shot in the arm to oil prices. On the flip side, we’ve seen gold prices declining dramatically after an unprecedented rally in 2016. Even with the most recent pullback, gold stocks are still up by more than 60% year-to-date.

Canadian financial stocks, represented by the S&P/TSX Capped Financials Index, also saw a decent turnaround in sentiment from Q3 to Q4, as 52% of advisors were bullish on this index, versus only 44% in Q3. Canadian advisors were also bullish on the U.S. equity indices tracked by the survey, with 61% of advisors bullish on the prospects for the S&P 500© Index and 63% bullish on the tech-heavy Nasdaq-100 Index.

U.S. stocks are trading at very high valuations – essentially the highest since the tech bubble of the early 2000s,” said Mr. Hawkins. “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.

Despite the strong inflows into Canadian-hedged U.S. equity ETFs, sentiment on the Canadian dollar was very mixed, with about 40% of advisors bearish on the direction of the loonie, 33% bullish and another 27% neutral. The Canadian dollar lost about 1.55% last quarter. Sentiment was also mixed on U.S. bonds, with 46% of advisors bearish and 35% neutral on U.S. 7-10 year bonds.

Sentiment was also varied when it came to the Canadian versus U.S. dollar trade: only 28% of advisors reported being bullish on the loonie heading into Q1.

The strength of the loonie is really dependent on the strength of energy prices,” said Mr. Hawkins. “Although the loonie rallied approximately 6% last quarter, it’s not surprising to see reserved sentiment here since there are a lot of unknowns in terms of energy prices and the direction of interest rates in the U.S. – which are probably the two biggest factors in pricing for the loonie.

There was a strong upswing in emerging market sentiment this quarter as well. More than half (52%) of advisors are bullish on emerging markets, as represented by the MSCI Emerging Markets Index.

There are two big stories with emerging markets: resurgent energy prices and the likely formation of a bottom on the Chinese equity market — many observers think the risk is largely priced-in on those equity prices,” said Mr. Hawkins. “Given the relatively low valuations of emerging market equities versus developed markets, more advisors may be more comfortable in investing in these stocks as potential risks subside.

Advisors were bullish on eight of 14 asset classes, overall a very bullish sentiment. This included favourable bullish sentiment on six of the seven equity indices tracked by the survey.

About the Q4 2016 Advisor and Investor Sentiment Surveys
Horizons ETFs conducts the only quarterly sentiment survey of Canadian investment advisors. Both results have been collectively branded under the title ‘Q4 2016 Advisor and Investor Sentiment Surveys.’ The surveys quantitatively measures advisors’ and investors’ quarterly outlooks as it relates to key benchmarks covering equities, bonds, currencies and commodities.

About Horizons ETFs Management (Canada) Inc.
Horizons ETFs Management (Canada) Inc. and its affiliate AlphaPro Management Inc. are innovative financial services companies, which combined make up one of the largest families of exchange traded funds in Canada. The Horizons ETFs' product suite 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 $6 billion of assets under management and has 75 ETFs listed on the Toronto Stock Exchange. Horizons ETFs Management (Canada) Inc. and AlphaPro Management Inc. are members of the Mirae Asset Global Investments Group.

For more information:
Mark Noble
Head of Sales Strategy,
Horizons ETFs Management (Canada) Inc.
(416) 640-8254
mnoble@horizonsetfs.com

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Horizons Announces October 2016 Distributions for Certain Active ETFs

Horizons ETFs is a Member of Mirae Asset Global Investments. Commissions, trailing commissions, management fees and expenses all may be associated with an investment in exchange traded products managed by AlphaPro Management Inc. and Horizons ETFs Management (Canada) Inc. (the "Horizons Exchange Traded Products"). The Horizons Exchange Traded Products are not guaranteed, their values change frequently and past performance may not be repeated. The prospectus contains important detailed information about the Horizons Exchange Traded Products. Please read the relevant prospectus before investing.

The Horizons Exchange Traded Products consist of the Horizons Index ETFs ("Index ETFs"), Bull Plus and Bear Plus ETFs ("Plus ETFs"), Inverse ETFs ("Inverse ETFs"), VIX ETFs (defined below) and active ETFs. The Plus ETFs and certain other Horizons Exchange Traded Products use leveraged investment techniques that can magnify gains and losses and may result in greater volatility of returns. These Horizons Exchange Traded Products are subject to leverage risk and may be subject to aggressive investment risk and price volatility risk, which, where applicable, are described in their respective prospectuses. Each Plus ETF seeks a return, before fees and expenses, that is either 200% or -200% of the performance of a specified underlying index, commodity or benchmark (the "Target") for a single day. Each Index ETF or Inverse ETF seeks a return that is 100% or - 100%, respectively, of the performance of a Target. Due to the compounding of daily returns, a Plus ETF's or Inverse ETF's returns over periods other than one day will likely differ in amount and possibly direction from the performance of their respective Target(s) for the same period. The Horizons Exchange Traded Products whose Target is the S&P 500 VIX Short-Term Futures Index™ (the "VIX ETFs"), one of which is a Plus ETF and one of which is an Index ETF, as described in their prospectus, are speculative investment tools that are not conventional investments. The VIX ETFs' Target is highly volatile. As a result, the VIX ETFs are not generally viewed as stand-alone long-term investments. Historically, the VIX ETFs' Target has tended to revert to a historical mean. As a result, the performance of the VIX ETFs' Target is expected to be negative over the longer term and neither the VIX ETFs nor their Target are expected to have positive long term performance. Investors should monitor their holdings, as frequently as daily, to ensure that they remain consistent with their investment strategies.

*The indicated rates of return are the historical annual compounded total returns including changes in per unit value and reinvestment of all dividends or distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. The rates of return shown in the table are not intended to reflect future values of the ETF or returns on investment in the ETF.