The average cash balance held by investors has reverted to levels seen in the immediate aftermath of the Brexit vote, figures show.

Cash allocations jumped from 5.5 per cent in September to 5.8 per cent this month, the highest level since July 2016 and the autumn of 2001, according to the latest BofA Merrill Lynch Fund Manager Survey.

The increase was attributed to fears of a European Union break-up, a bond crash and Donald Trump winning the White House next month.

Manish Kabra, European equity quantitative strategist at Merrill Lynch, said that although investors see the EU disintegrating as a big tail risk, the European fund managers surveyed are more optimistic about the economic growth outlook for the eurozone and expect stronger inflation.

Globally, inflation expectations are at a 16-month high and perceptions of developed market equity and bond valuations are at record highs. For the first time since late 2012, investors are no longer underweight in commodities.

The survey showed a rotation of investors’ funds out of healthcare and pharmaceuticals, real estate investment trusts and bonds, into banks, insurance, equities, commodities and emerging markets. Long high-quality stocks, long US/EU investment grade corporate bonds, and minimum volatility strategies were identified as the most crowded trades.

Allocation to emerging market equities has jumped to the highest overweight in three and a half years, rising from 24 per cent in September to 31 per cent this month.

Meanwhile, allocation to UK equities has shrunk to net 27 per cent underweight from net 24 per cent. Allocations to US and eurozone equities have remained steady.

A total of 213 panellists with a collective $563 billion in assets under management took part in the survey.