Cash levels are up to 4.9% of portfolios on average, up from just 4.5% in May. The proportion of investors with an equities overweight fell to 38% from 47%.
Fears of the impact a Federal Reserve interest rate rise will have on asset prices, concern about a Greek default and a possible bubble in Chinese equities are the biggest drivers of the shift, BAML said.
Some 80% of fund managers now expect a rise in short-term rates in the States.
The majority of the panel now expects ‘a negative resolution of Greece talks’ with 15% predicting a ‘Grexit’ and 42% expecting a default without an exit.
Seven out of ten investors said China’s equity market is in a bubble while net 50% see China’s economy weakening.
“Higher cash levels show how caution is in the air, with 65 trading days until we expect the Fed to tighten,” said Michael Hartnett, chief investment strategist at BAML Global Research.
“Investors remain bullish on European equities but are increasingly concerned about Greece and higher yields,” added James Barty, head of European equity strategy.
BAML’s survey has 207 panellists with US$562 billion of assets under management.
