Global investors' confidence in the world’s economic outlook has been bleak this month, according to a new investor survey.

Investors worldwide took risk of the table and boosted their cash holdings to 2008 crisis levels amid concerns about China and other emerging markets, according to Bank of America Merrill Lynch's fund manager survey for September.

Asset allocators have adopted a more conservative approach and deemed the threat of recession in China the top tail risk of September. In the survey of 214 panellists with $593 billion of assets under management, fund managers flagged a potential emerging markets debt crisis. Global emerging markets underweight positions reached a record net 34 per cent and aggressive underweights hit an all-time high.

“Investors were already positioned for lower growth in China and emerging markets, but their risk-off stance has intensified. Contrarians will be noting the aggressive underweight positioning in emerging markets,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.

As investors de-risked, cash balances rose to 5.5 per cent and equity overweight positions fell a net 24 percentage points. Meanwhile, hedge fund net exposure and perception of market liquidity conditions shrunk to the lowest level in three years.

“European equities have been hurt by the risk-off trade, but they remain a favoured market,” added James Barty, head of European equity strategy at the firm.