Investors are once again dodging risk assets as concerns about the eurozone re-emerge, the latest Bank of America Merrill Lynch fund manager survey shows.

A quarter of global asset allocators are now overweight cash compared with 6 per cent in March, according to the poll. The percentage of investors who are overweight equities has dropped from a third to a quarter between March and April.

“We believe investors will retain a sense of caution throughout the second quarter,” said Michael Hartnett, chief global equity strategist at BoA Merrill Lynch Global Research.

The findings are very different from recent outlooks by major investment firms such as HSBC and BlackRock, which have emphasised the cost of sitting on cash and being out of the market.

More than half of those polled by BoA Merrill Lynch said that sovereign debt funding in the eurozone is the number one risk, up from 38 per cent in March. A net 24 per cent of investors in Europe also said that they expect the economy of the region to deteriorate in the next 12 months.

More central bank activity to come?

The survey illustrates how the impact of the European Central Bank’s long-term refinancing operation, which has supported market sentiment in two phases since December, is now beginning to wane.

The less upbeat investment environment has made asset allocators hungry for more central bank action. Nearly two thirds expect more asset purchases from the Federal Reserve, up from 53 per cent in March.

Forty-four per cent also expect the ECB to engage in a more direct scale quantitative easing, possibly in the shape of buying government bonds, before the end of the third quarter, up from a third a month ago.

On a more positive note, for the first time since November 2010, the BoA Merrill Lynch poll shows optimism for the Chinese economy, with a net 4 per cent of the regional panel expressing a positive view.

The survey was conducted between 5 and 12 April and included a total of 256 panellists with a total of $706 billion in assets under management.