The BAML survey of 196 participants with a total of $575 billion under management was conducted between February 2 and February 8, when world equity markets fell by more than 5 percent. S. Federal Reserve would have to tighten faster than previously anticipated.
Fund managers are taking precautions against further stock market slumps amid rising anxiety.
"The February fund manager survey allocation is positioned for higher rates and a weak U".
Higher bond yields tend to hurt equities because they increase borrowing costs for companies and ultimately consumers.
The first major survey of global investors since the reawakening of stockmarket tensions at the start of this month has found that fund managers seem to have soured on equities (understandably after the big falls) and where the United States economy may be headed. That did not push investors to stocks, where allocations fell by the biggest amount in...
BAML said this 12 percentage point drop was short of the 16 percentage point monthly fall required to signal that a risk asset rout was complete, according to historical survey data.
Participants reported a record one-month jump in net percentage of investors indicating they have taken out protection against a sharp fall in equity markets in the next three months, at net minus 30 percent in February from net minus 50 percent in January.
'While this month's survey shows that investors are holding on to more cash and allocating less to equities, neither trait moves the needle enough to give the all clear to buy the dip,' he said.
The survey, which questioned almost 200 fund managers at the beginning of February when stock markets were falling, revealed they were spooked by the declines in the United Kingdom and U.S. markets that pushed up volatility and bond yields.
Investors have also reduced their bond portfolios to a net 69 percent underweight - the lowest since the survey began two decades ago.
It is not just inflation and bonds that mangers are anxious about, they still remain concerned about the US Federal Reserve or European Central Bank making a policy mistake (18% of managers) and market structure (13%).
Of those investors who responded to the survey, 70% think the global economy is in "late cycle" - meaning it is heading for a downturn.