The number of global fund managers reporting overweight cash positions has reached the highest level since the depths of the financial crisis, according to Bank of America Merrill Lynch's regular survey of investors.
A net 44% of managers said they were running overweight cash positions in their funds this month, the most since January 2009.
Bank of America Merrill Lynch conducted the survey of 218 managers in the first week of February, and the results show a strong January for stock markets after a torrid end to 2018 has failed to spur bullishness among investors.
'Despite the recent rally, investor sentiment remains bearish,' said Michael Harnett, chief investment strategist at the investment bank.
Further evidence of caution can be seen in fund managers' allocation to global shares. Although a net 6% said they were overweight, that is down from 18% in January, and the lowest level since September 2016, following the Brexit vote.
However, the move into cash should not be overstated. While a greater number of fund managers are now holding overweight positions, average cash levels across the portfolios of the fund managers surveyed actually fell, from 4.9% in January to 4.8% this month. That is still above the 4.5% level Bank of America Merrill Lynch takes as a contrarian 'buy' signal for shares.
A global trade war is the dominant fear among investors, as it has been for eight consecutive months previously.
That is fuelling concerns over the global economy, with a net 55% saying they are bearish on growth over the next 12 months.
But that has not dented building enthusiasm among managers for emerging markets. A net 37% of managers are now reporting overweight positions in the region, up from 29% in January, and emerging markets are now the 'most crowded trade' for the first time in the history of the survey, replacing long positioning on the US dollar.
The UK stock market remains the least favoured region for global investors, although this month's survey has brought some signs of an improvement in the outlook. A net 25% of managers said they were underweight UK stocks, compared to 38% in January.