Each year, Evolve surveys Canadian investment advisors across Canadian banks, brokerages and independent firms for their outlook on thematic and traditional asset classes. The 2021 Survey covered the period beginning September 10, 2021, to December 31, 2022. This year’s survey explored how over 200 advisors feel about the rise of thematics, such as disruptive technologies, ETFs adoption within their books, as well as the impact the pandemic is having on their work arrangements, moving between traditional and home office spaces.

Investing in thematics such as cybersecurity and electric vehicles

Of the 208 respondents, 74% are using thematic ETFs and 67% of these advisors expect their usage of thematic ETFs to increase. On average, ETFs made up 23% of the assets under management (“AUM”) respondents reported. Of the respondents, 77% expect their ETF holdings to increase over the next year.

“We continue to see thematic ETFs gain traction among advisors, with millennial-interest being a driving force, since they want to invest their money in asset classes that resonate with their personal values,” says Raj Lala, CEO of Evolve. “Thematic ETFs focused on sectors like cybersecurity and electric vehicles have also demonstrated positive performance since their inception, which we expect will continue to build as the world continues to evolve technologically.” Approximately 80% of the advisors surveyed indicated cybersecurity to be a thematic area of interest in the coming year, followed by cloud computing (60%) and electric vehicles (59%).

Cryptocurrency investing remains client-driven

 Meanwhile, the demand for cryptocurrency investing continues to be investor-driven. Forty percent of advisors said they invest in cryptocurrency ETFs, with 31% stating client interest being the largest driver in doing so, followed by ‘Belief in the technology’ (18%) and ‘Store of Value’ (13.46%). Of all the digital currencies, 80% of advisors stated they believe Bitcoin will continue to be the largest cryptocurrency at the end of 2022; but 85% expect Ether to have the most market growth in that same period. In 2019, Bitcoin outperformed Ether by 95%, while Ether’s return was negative. In 2020, Ether outperformed Bitcoin by over 150%.*

“There are a lot of barriers to investing in cryptocurrencies for investors, such as needing to set up a digital wallet,” says Lala. “Cryptocurrency ETFs make the asset class more accessible since investors don’t require a digital wallet, they can invest in the asset class through their investment account the same way they buy or sell stocks; there is also the added feature of being able to do so in a registered account.”

Inflation anticipated to be the largest market challenge in 2022

Over the next year, approximately a third of advisors (34%) anticipate inflation to be the largest challenge to markets, followed by valuations (24%) and a COVID-19 resurgence (22%). Investing in common dividend shares (75%) followed by covered calls (42%) and traditional fixed income ETFs (40%) are how advisors focus on generating income for their clients.

“We continue to see interest rates remain at historically low levels with a pickup in inflation,” says Lala. “In some cases, this has caused advisors to seek higher yields in dividend-based strategies and move away from traditional fixed income.”

Advisors on interacting with dealerships and social media – LinkedIn, Facebook and Twitter

When it comes to market information, an advisor’s dealership is the most popular source, according to 61% of respondents, followed by Morningstar (56%), Bloomberg (49%) and Thomson One (43%). Of the advisors we surveyed, LinkedIn is by far the most popular social platform, with 80% using it. This is followed by Facebook (44%) and Twitter (37%).

In-person and virtual client interactions will be equally as important

On average, advisors are spending approximately 46% of their time in the traditional office, with 57% expecting that amount of time to stay the same over the next year, while 41% of respondents expect that to increase. Over 40% of advisors indicated that interacting with clients in person and virtually will become equally as important over the next year.

About the methodology

The survey was distributed to qualified advisors within major financial institutions and brokerages, as well as independent advisory firms across Canada. Responses were submitted via SurveyMonkey. The average book size of respondents in the survey varied, with over 65% reporting an AUM of over $100 million. Approximately 34% of respondents had an AUM of less than $100 million. The bulk of their clients (80%) were between the ages of 45 to 65, with those over 65 making up 14% of their books. ETFs made up on average 22% of their book of business, with 79% expecting that to increase over the one-year period. 

*Source: Bloomberg.