Given the shock waves seen around the world in recent weeks, investors' confidence in the global economy has fallen sharply. According to a monthly survey of fund managers conducted by Bank of America Merrill Lynch, just 42 percent of survey participants expect the global economy to strengthen over the next year, down from 55 percent just a month ago. China was viewed as the biggest risk to growth, with 62 percent expecting its economy to weaken over the same period.
Surprisingly, though, the same investors also increased their exposure to global equities to 42 percent of their portfolios, up from 38 percent last month. But many also hedged their short-term exposure, with the percentage of investors buying protection against a decline in equities over the next three months at its highest level since February 2008.
Fund managers also reported that they are now holding about 5.5 percent of their portfolios in cash. That's the highest level for that figure since December 2008.