Bearish sentiment among Canadian investment advisors has increased over the last three months, according to a survey released Wednesday by BetaPro Management Inc.

Bullish sentiment decreased on 14 of the 15 asset classes from the previous quarter survey.

The only asset class that saw an increase in bullish sentiment was silver, which saw a very modest 1% gain from last quarter’s survey.

The survey was conducted between March 19 and March 31. Nearly 200 advisors, who collectively oversee an estimated $20 billion in client assets, took part.

While 58% of advisors surveyed are still bullish on the prospects for Canadian stocks, represented by the S&P/TSX 60 Index, is number is substantially lower than the 70% of advisors who said they were bullish on Canadian stocks in the previous quarter.

Nearly one in three respondents are bearish in their outlook for the S&P/TSX 60 Index(TM), which is up from 19% from the previous quarter.

Bearish sentiment on U.S. bonds is the highest it has ever been in the history of the survey at 55%, Betapro says.

Bond prices generally have an inverse correlation to interest rates. With rates at extreme lows on long-dated U.S. treasuries, their prices are likely to be sensitive to a rise in interest rates.

Half of the advisors who responded to the survey remain bullish on the Canadian dollar versus the U.S. dollar, which is now trading near parity.

“The preference for the Canadian dollar is part of a long-standing preference for Canadian asset classes over American asset classes,” says Howard Atkinson, president of BetaPro.

Advisors, who have consistently more bullish on resources and emerging markets than other asset classes over the last several surveys, diminished their bullish outlook for these asset classes in the most recent survey.

“Most markets have seen a tremendous run-up since hitting lows in March 2009, but it appears there are a growing number of advisors who are unsure whether the pace of returns are sustainable,” says Atkinson.

The latest survey results “seem to suggest increased uncertainty amongst advisors,” he says.

On U.S. stocks, represented by the S&P 500, only 44% of advisors were bullish, down from 58% in previous quarter despite a 4.87% return in that index in the first quarter of 2010. Bullish sentiment on emerging market stocks, represented by the MSCI Emerging Markets Index, also dropped to 56% from 64%.

Bullish sentiment was also down substantially for the energy sector. Bullish sentiment on crude oil prices was only 44%, compared to 54% in the previous quarter.

The nearly 31% drop in natural gas prices during the quarter may have been a factor in a stark reversal in sentiment for natural gas, where only 31% of advisors surveyed were bullish on natural gas, versus 59% in previous quarter.

IE