Having been 4.8% in September, the average cash balance held by global managers fell to 4.7% in October, well below the high of 5.8% which was hit in October last year.
However, it still remains above the 10-year long-term average balance of 4.5%, which according to BofAML suggests a buy signal for investors.
“Cash balances dipped last month but remain somewhat elevated,” said Michael Hartnett, chief investment strategist.
“A faster drop in cash leading into 2018 would indicate a sell signal from investors. Icarus remain in tact.”
In terms of positioning, October saw a rotation into banks and Japanese and US equities, and a switch out of utilities, emerging markets, healthcare and bonds.
The allocation to equities also rose to its highest level in six months, with a net 45% of managers overweight in the asset class.
Bond yields set to rise
According to the survey managers are positioning themselves for higher bond yields, with 82% of those surveyed indicating they expect yields to rise in the next 12 months.
Additionally, a record 85% said bonds were overvalued, explaining why the allocation to the asset asset class fell to a net 60% underweight, which is the lowest level in seven months.
European equities also proved popular in October, with the allocation to its highest level in five months to net 58% overweight, up from a net 54% overweight last month.
“Europe is in vogue according to global investors, with the overweight in Eurozone equities back near record highs and EPS expectations accelerating, said Ronan Carr, European equity strategist.
“European investors remain positive on the macro outlook and are looking for a global re-acceleration.”
