Canadian investors appear to be coming off the sidelines, moving out of money market funds in July in favor of bond and balanced funds, according to the Investment Funds Institute of Canada.

Whereas in July 2008, Canadians bought $498 million of money funds, last month they sold $1.35 billion of money funds. The best-seller in July was fixed income funds, taking in $718 million, followed by balanced funds, which took in $558.3 million and global high-yield income funds, which netted $281.5 million.

While the S&P 500 climbed 7.4% in July, the S&P/TSX rose 4%.

Whether the market is rebounding or not, Canadian investors are most likely to continue investing in fixed income and balanced funds, Dennis Yanchus, manager of statistics at IFIC, told The Globe and Mail.

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