Foreign investors poured money into Canadian stocks and bonds in August.

Non-residents added $5.1 billion worth of Canadian securities to their portfolios during the month, with the money being spread evenly among all asset categories, Statistics Canada said.

Canadian bonds proved particularly popular, with non-residents acquiring an additional $4.5 billion worth of the assets. The movement toward bonds has been a trend throughout 2009.

Canadian stocks, too, were popular with foreign investors in August. Non-residents snapped up $1.7 billion worth of the asset class during the month. In the midst of a steady, impressive gain since March, Canadian stocks only gained an average of 0.75 per cent in August.

Money market funds, however, proved less popular, as foreign investors shed a further $1.1 billion worth of their holdings of the assets. In July, they divested $3.8 billion.

Movement to stocks from bonds

For their part, Canadian investors tinkered with their foreign securities holdings, moving away from bonds and into foreign stocks for a net reduction of $112 million.

Canadian investors sold $2.7 billion worth of foreign bonds during the month, with a particular focus on divesting two-year U.S. government bonds, Statistics Canada said Monday. Two-year U.S. government bonds have posted lower yields than their Canadian counterparts since September 2007.

Canadian holdings of foreign paper fell to their lowest level of 2009 during the month, as the Canadian dollar appreciated against all its major trading counterparts.

Canadians bought a further $2.7 billion of foreign stocks in August, as major global equity markets posted gains. This continues a trend begun in August 2007. Since then, Canadians have bought $37.7 billion of foreign stocks while selling $43 billion of foreign debt instruments.