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FUNDS ADOPTING NUMBERS STRATEGY

More Canadian mutual funds are playing by the numbers.

The fund arm of AGF Management Ltd. today plans to launch three quantitative or "quant" funds that use custom-built computer programs to screen and pick stocks.

They include AGF Canadian All Cap Equity, AGF Global High Income and AGF Global Balanced High Income funds. The funds will be run by Highstreet Asset Management Inc., a money manager specializing in a quantitative investing that was acquired last year by AGF.

"We think there is a growing appreciation for this part of the market," Randy Ambrosie, president of AGF Funds Inc. said in an interview.

AGF is the latest player with fund offerings that rely on financial data to choose stocks.

Royal Bank of Canada was a pioneer with its funds managed by James O'Shaughnessy in 1997.

In 2004, Franklin Templeton Investments launched its Bissett All Canadian Focus Fund with a quant focus.

Others Canadian players running quant funds include names like Hillsdale Investment Management Inc., Selective Asset Management Inc. and Van Arbour Asset Management Ltd.

The AGF funds focus on the "areas of strength" for Highstreet that has attracted $5.4-billion in assets in nearly 10 years from mainly institutional investors and high net worth clients, Mr. Ambrosie said.

Highstreet's Canadian equity portfolio has beaten the S&P/TSX composite index by five-percentage points annually since its inception in October, 1998, said Highstreet senior vice-president Rob Jackson.

Among AGF's offerings, the global high income fund, which screens for high dividend stocks, has a different twist.

It offers a 5-cent per unit monthly distribution that will be taxed favourably as a capital gain instead of a dividend, through using futures contracts, Mr. Jackson said.

© 2007 The Globe and Mail. All rights reserved.

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