Global investors raised their cash levels to 5.5% in September, up from 5.4% in August, according to the latest Bank of America Merrill Lynch fund manager survey.

Forty-two percent of investors said high cash levels were a “bearish view on markets,” and 20% said those levels showed a “preference for cash over low-yielding equivalents.”

Bank of America noted that average cash balances above 4.5% generated a contrarian buy signal and cash balances below 3.5% a contrarian sell signal.

The equity allocation relative to the cash allocation in September was effectively at its lowest point in four years, a level that has historically been a good entry point to stocks, according to the survey.

Global growth expectations rose to a nine-month high in September, with a net 26% of investors expecting the global economy to improve over the next 12 months.

Sixty-one percent of investors said they expected higher long-term rates over the next 12 months, sharply up from the 47% of fund managers who said this in August.

Chinese growth expectations also improved in September to negative-32% from negative-45% last month.

A third of fund managers in the poll saw Treasuries as the main driver of stock prices over the next six months, while 25% said it would be the U.S. dollar and 13% the European risk premium.

Eight in ten respondents believed that neither the Bank of Japan nor the European Central Bank would eliminate negative rates over the next 12 months.

At the same time, 53% of investors said it was unlikely a central bank would adopt a policy of helicopter money over the same period.

The most crowded trades in September were all “NIRP (negative interest rate policy)-winners,” according to the survey.

Thirty percent of investors cited long high quality stocks as the most crowded trade, followed by 26% who cited long US/EU investment grade bonds and 11% long emerging market debt—all of which are dependent on NIRP.

Twenty-three percent of fund managers in the September survey said the possibility of EU disintegration was the biggest tail risk, followed closely by 22% who worried about the Republican candidate winning the White House in November. Fifteen percent each cited renewed China devaluation and U.S. inflation as the biggest tail risk.

A net 54% of investors—an all-time high, BoAML said—considered equities and bonds overvalued. And the percentage of those who said stocks were overvalued reached the highest level since May 2000.

Hedge fund exposure to stocks in September was at its highest since May 2013, underscoring the market’s vulnerability to bond shock.

“Investors see an unambiguous vulnerability to ‘bond shock’ among risk assets, with the most crowded negative interest trades and EM equities susceptible should the Fed and especially the BoJ fail to reduce bond volatility in September,” Bank of America’s chief investment strategist Michael Hartnett said in a statement.

An overall total of 173 panelists with $486 billion in assets under management took part in the September fund manager poll.

Allocation allocations

The September poll uncovered the following asset allocation trends:

• Allocation to U.S. equities fell to net 7% underweight from net 11% overweight last month.

• Allocation to Eurozone equities improved to net 5% overweight from net 1% overweight in August.

• Allocation to emerging market equities jumped to a 3.5-year high overweight of net 24% overweight from net 13% overweight last month.

• Allocation to Japanese equities falls to net 8% underweight from net 1% underweight, the biggest underweight since December 2012.

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