Canadian investment advisors hold a bearish outlook on Canadian equities going into the third quarter of 2018 yet are bullish marijuana stocks, energy and crude oil, according to the results of the Q3 2018 Advisor Sentiment Survey published Wednesday by Toronto-based Horizons ETFs Management (Canada) Inc.

The Q3 survey asked Canadian investment advisors for their expectations of returns on 14 distinct asset classes for the upcoming quarter, which ends on Sept. 30.

The results show that only 47% of Canadian investor advisors were bullish on Canadian equities, slightly less than 48% of advisors who said they were bullish on the S&P/TSX 60 index, as indicated in the previous Q2 Advisor Sentiment Survey.

Despite the bearish sentiment, Canadian equities had a very strong second quarter, primarily due to the solid run in energy prices, with the S&P/TSX 60 index generation at 6.2% return.

The bearish outlooked applied to other surveyed Canadian sectors, with the exception being the S&P/TSX capped energy index, where 55% of Canadian advisors were bullish on the outlook for energy related equities. The S&P/TSX capped energy index generated a 16.25% return last quarter.

Advisors were also bullish on crude oil, as represented by WTI Crude Oil Futures, with 53% of advisor participants saying that oil prices will continue to rise in Q3. Advisors did not share that same opinion of natural gas, with only 35% expecting national gas prices to incease. National gas futures contracts were up nearly 7% last quarter.

“One cause for weaker performance expectations may be related to recent Canada/U.S. tariffs and an ongoing climate of concern surrounding the fate of NAFTA,” says Steve Hawkins, president and co-CEO of Horizons ETFs, in a statement. “NAFTA apprehensions don’t have any real impact on the price of crude oil, which was up another 14% last quarter. Canadian energy producers continue this reversal-of-fortune from previous quarterly surveys, where investors were generally bullish on Canada, but bearish on energy stocks.”

Although not a Canadian sector, but one dominated by Canadian stocks, the marijuana sector, as represented by the North American Marijuana Index, had the highest level of bullish sentiment with 58% of advisors expecting marijuana stocks to deliver positive returns in Q3. This index was up 5.78% from last quarter, with much of that performance coming from the announcement of final dates for the legalization of recreational marijuana in Canada.

“Oct. 17, 2018 is the date that many marijuana investors have circled on their calendars, as this is when recreational marijuana will become legal in Canada,” Hawkins says. “Since this sector is such a news-driven space, many advisors may be expecting the sector to get a big bump in interest as we near the day.”