The reading represents the highest since July 2007 and is 15 per cent up on December’s result.

A net 55 per cent of investors expect the world’s economy to strengthen in 2011 with a net 39 per cent predicting “above trend” growth in the coming 12 months. A net 57 per cent believe that corporate profits will rise 10 per cent or more this year.

Meanwhile, a net 72 per cent believe inflation is set to increase up from a net 48 per cent two months ago. A net 42 per cent of investors believe monetary policy is “too stimulative,” says the report.

“Investors believe monetary easing is working; in the absence of either tighter policy or weaker data, equity enthusiasm looks contagious,” said Michael Hartnett, chief global equity strategist at BoA Merrill Lynch Global Research.

In addition sentiment towards the US and Japan has improved, with a net 27 per cent of the global panel overweight US equities, the highest reading since November 2008 and surpassing December’s level of a net 16 per cent. A net 5 per cent of the global panel is overweight Japanese equities, compared with a net 29 per cent being underweight in November.

Global emerging market support remains high but has declined as a net 43 per cent of asset allocators overweight GEM equities, down from a net 56 per cent two months ago.

Commodities investment has fallen with a net 16 per cent of asset allocators overweight the asset class compared with a net 22 per cent a month ago.

Meanwhile, bond investment has fallen with more managers underweight bonds than last month, a net 54 per cent in January compared with a net 47 per cent in December.

The survey took place between 7 January to 13 January 2011 and was conducted by BoA Merrill Lynch Research with the help of market research company TNS.