The wild swings in the stock market led Canadian mutual fund investors to overwhelmingly choose money market funds over equity funds in March, industry figures show.

Preliminary figures for last month show that net fund sales came to between $2.3 billion and $2.8 billion, the Investment Funds Institute of Canada (IFIC) said. Almost all of the additional money was due to money market sales.

"Investors continue to focus on money market funds though we
expect that they will move this money into long-term funds in the
coming months as the volatility subsides," IFIC vice-president Pat Dunwoody said in a statement Wednesday.

Five of the 10 biggest fund companies reported net redemptions of long-term funds in March — a category that includes all funds except money market funds.

Net sales of long-term funds have been weak so far this year. There were net redemptions of $4.35 billion in January, followed by a modest rebound in February with net sales of $2.9 billion. But net sales of money market funds in the first quarter of this year have totalled more than $10 billion, as market turmoil had investors parking their money until the market settles down.  

The overall net sales figures for this March are a considerable drop from the $5.16 billion in net sales the industry reported in March 2007. At that time, money market funds accounted for barely a tenth of the new money.

Morningstar Canada said its precious metals equity fund index was the worst performer among its 42 indices in March — losing 7.7 per cent. European equity funds were the best performers — rising 4.5 per cent.