A worldwide survey of fund managers showed their optimism about the macroeconomic situation is improving rapidly, and there is spare cash waiting to be put into the market.

A global survey of asset managers by Bank of America Merrill Lynch shows they became more optimistic about the overall economic picture in February from a month ago, although they have not decisively dug into spare cash to put money to work.

The monthly poll showed that 23 per cent of investors expect a “boom” (above trend growth and inflation), compared to 1 per cent taking this view one year ago. Some 43 per cent said they expect “secular stagnation” (below trend growth and inflation), from 88 per cent a year before.

Cash levels dipped to 4.9 per cent of all holdings in February, from 5.1 per cent in January, but levels are still higher than two months ago, the survey showed.

The survey was conducted from 3 to 9 February among a total of 210 panellists collectively managing $623 billion in assets.

Investors identify European elections raising disintegration risk as the biggest “tail risk” (36 per cent), closely followed by a trade war (32 per cent) and a crash in global bond markets (13 per cent). Separately, a net 28 per cent of investors – the highest proportion since September 2006 – think the US dollar is overvalued. The most crowded trade is seen as being bullish of the dollar (41 per cent of respondents take this view.).

Investors rank “protectionism” as the most likely cause of a bear market (34 per cent), followed by “higher rates” (28 per cent) and a “financial event” (18 per cent).

Gold is viewed as offering the best investment protection, with a record net 15 per cent of investors considering it undervalued.

Allocation to eurozone equities has risen to the highest level in eight months, with a net 23 per cent of respondents saying they are overweight, up from 17 per cent in January. (The net figure comes from subtracting underweight views from the overweight ones.)

While allocation to Japanese equities remains little changed, the proportion of investors who want to be overweight over the next year has risen to net 14 per cent, up 5 percentage points from January. Emerging market equities allocation improved to net 5 per cent overweight from net 6 per cent underweight last month.