At the same time the average cash balance rose to 4.7% from 4.4% in last month, while a record number of managers said they had taken protection against a sharp fall in equities over the course of the next three months. In January a net -50% said they were taking protection, which fell to a net -30% this month.
Such a stance may be explained by the fact that some 70% of the 196 global fund managers surveyed said they now believe the global economy is in the “late cycle”, which is the highest level since January 2008.
The allocation to bonds meanwhile hit a record low of a net 69% underweight in February, while the allocation to cash climbed to a net 38%, which is the highest since November 2016.
Only 5% of managers said that they expect global interest rates to be lower in the next year, with 80% expecting them to rise.
“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,” said Michael Hartnett, chief investment strategist at BofA ML.
From a regional perspective, at a net 41% overweight the allocation to eurozone equities fell to a one-year low.
“Despite improving confidence in European earnings, the US and emerging market profit cycles seem more favourable to investors right now,” said Manish Kabra, head of European quantitative equity strategy at BofA ML.
