Investors added to cash holdings and took other steps suggesting a loss of risk appetite in April, a survey from the US bank found.

Risk aversion rose in April among global investors, a survey showed, with average cash balances surging to 5.4 per cent from 5.1 per cent a month earlier and near the 15-year high seen in February. 

The findings came from the Bank of America Merrill Lynch monthly poll of the world’s fund management groups. The survey, carried out from 1 to 7 April, was conducted among 200 panellists with $596 billion in total assets under management.

The level of “conviction” among respondents to the fund manager survey is at an 18-month low.

Expectations around global growth held stable with little change from March; a net 10 per cent of respondents said they expect the economy to strengthen; some 82 per cent said a recession is unlikely in the next 12 months.

The survey showed respondents rotating into staples and cash, exiting Japanese equities, as well as discretionary sectors, commodities, and eurozone assets.

The survey also showed that a large majority of fund managers still expect no more than two US interest rate rises in the next 12 months.

Among other takeaways from the survey, only 14 per cent of investors surveyed think it “likely” that the UK electorate will vote to leave the European Union in the referendum scheduled for 23 June.

In Europe, a record percentage of fund managers said they saw EU monetary policy as “too stimulative” while confidence in this policy as an economic growth driver dropped sharply to 15 per cent, from 24 per cent in March.

As far as emerging markets are concerned, while equity allocation to the sector is underweight for a record 16th month, allocation levels improved to 11-month highs and the profit outlook improved drastically to net 16 per cent unfavourable, from net 34 per cent unfavourable. Some 36 per cent of investors think global emerging market currencies are undervalued – the highest level since March 2013.

Turning to Japan, allocation to Japanese equities fell to a net 3 per cent underweight from a net 15 per cent overweight in March, marking its first underweight positioning since December 2012.

“With valuations for bonds and equities at their seventh highest reading in 13 years, investors may be turning to cash to protect against the downside while shunning risk assets where valuations constrain the upside. Range-based trading is likely to continue,” said Michael Hartnett, chief investment strategist. 

Asked what are the most “crowded trades”, respondents' answers were as follows: long (i.e. bullish) of the dollar (20 per cent); short emerging markets (19 per cent) and long high-quality stocks (17 per cent).