BMO starting to see shift out of equities

Bank of Montreal's Canadian private bank is starting to see investors shift money out of stocks amid mounting concern related to Europe's debt crisis and a global economic slowdown.

Funds had flowed into equities this year until about six weeks ago, Paul Taylor, who oversees about $14-billion in assets as chief investment officer of BMO Harris Private Banking, said today on a conference call with reporters.

Stocks worldwide have tumbled since late July as Greece edged closer to defaulting on its debt, threatening to topple some of Europe's biggest banks and weaken the global financial system. The U.S.'s credit rating was cut in August, and signals pointed to slowing economic growth in the U.S. and China, the world's two largest economies.

"The retail investor has been like a deer caught in the headlights of an 18-wheeler, and they have been moving money back to cash most recently," Mr. Taylor said.

Declining stock prices have made valuations appealing for investors who can wait years for a recovery in case of a U.S. recession or worsening conditions in Europe, Mr. Taylor said.

Gains from equities are likely to outpace those of government bonds in the years ahead, he said. Shares of Canadian financial companies, such as IGM Financial Inc. , are attractive for their solid management and growing dividends, Mr. Taylor said.