Canadian acquisitions of foreign securities amounted to $10 billion in May, the third highest on record, Statistics Canada reported today.

Purchases of foreign stocks alone totalled $5.9 billion, the biggest amount in five years.

Two-thirds of the investment went to equities issued by foreign firms resident outside the United States with the remaining third to U.S. shares. This is a switch from the 11 preceding months when U.S. shares were preferred by Canadian investors.

Canadians also invested heavily in foreign bonds, acquiring $4.3 billion worth in May. Canadian purchases of these instruments have been strong since September 2004.

The government agency said a significant factor contributing to May’s strong showing was the deregulation of Canadian pension funds and retirement savings plans that saw the removal of limits to their holdings of foreign securities.

Meanwhile, non-residents increased their buying of Canadian securities to $5.7 billion worth, an 18-month high.

May’s increase in holdings was driven by a $2.4 billion net purchase of outstanding Canadian bonds by non-residents. These purchases were concentrated in the federal government sector.