Global investors cheered up a bit in November, and their risk appetite rose, even taking a more sanguine approach to China, while cutting some cash, Bank of America Merrill Lynch says in its monthly poll.

Some of the gloom that beset investors in recent months lifted in November with managers of portfolios trimming cash and adding to equity holdings, property and alternative sectors, according to Bank of America Merrill Lynch.

In its monthly global fund management survey, carried out among 201 panellists with $576 billion of assets under management, the percentage of asset allocators who were bullish, or overweight, of equities rose significantly by 17 points to a net balance (subtracting bearish from bullish views) of 43 per cent.

Cash levels, on average, made up 4.9 per cent of global portfolios, down from 5.1 per cent in the previous month.

Some four-fifths of panellists now expect the US Federal Reserve to raise rates during the current quarter. Globally, there has been a recovery in economic confidence, with net expectations of it strengthening in the next 12 months up 22 percentage points from October.

As a part of this move, investors were less nervous in the latest poll about a slowdown in China than they had been previously. Local fund managers turned neutral on the country’s growth outlook– their most positive reading in more than a year, the survey found.

Fieldwork for the survey was carried out between 6 and 12 November.

The upswing in optimism comes in the wake of the late-summer slide in mainland Chinese stocks, the fact that most emerging market indices are in the red, and continued uncertainties about the strength of the US and eurozone. As reported a few days ago, Japan’s economy is now in a technical recession (as defined by two successive quarters of falling GDP). The poll was carried out before geopolitical worries were starkly highlighted by the terrorist attacks in Paris last Friday.

Among other findings of the BoA Merrill Lynch poll, it found that the eurozone and Japan strengthened their positions as the most favoured equity markets globally, reflecting deeper consensus on the US dollar. A net 67 per cent now expect the currency to appreciate in the next year. Real estate and alternative investment overweights rose to their second-highest readings in the survey’s history. In contrast, aggressive underweights on commodities and global emerging markets were maintained.

"The Big November FMS [fund management survey] takeaway is that the most vulnerable tactical trade heading into December Fed hike is `long dollar', and associated positioning, i.e. long discretionary, eurozone, banks, Japan, and short emerging markets, resources, commodities," the authors of the report said in a note.

“With consensus very clustered in QE [quantitative easing] and strong dollar trades, asset price upside appears limited until an ‘event’ curtails the Fed hiking cycle, as in 1994,” Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, said.