Having been a net 15% underweight in the US in June, the level dropped to a net 20% in July, while relative positioning to US versus the rest of the world (the average of the eurozone, emerging markets, Japan and the UK) fell to its lowest level since November 2007 at -40%.
Replacing the US, global fund managers significantly upped their exposure to Japan, rising from net 1% overweight in June to a net 28% overweight in July.
While average cash balances fell from 5% last month to 4.9% in July, the level remains above the 10-year average of 4.5%, with managers explaining this overweight cash stance as being down to their bearish views on markets (25%) and preference for cash over low-yielding assets (20%).
“Fund managers’ biggest fears are a shock coming from bond markets or central banks,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch. “Too many investors see the Fed as a likely negative catalyst.”
The survey also showed fund managers remain bullish on Europe, with a net 51% expecting the European economy to strengthen over the next 12 months.
Ronan Carr, European equity strategist, said: “Investors expect eurozone inflation to rise and find monetary policy too stimulative, putting the ECB’s signalling powers to the test.”
Some 207 global managers with assets under management of $525bn took place in the survey, which was conducted between 7 and 13 July.
