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Despite investors’ cash levels in July inching down to 4.9% from 5% the previous month, the level was still above the 10-year average of 4.5%, according to Bank of America Merrill Lynch’s July fund manager survey.

Twenty-five percent of survey respondents said they were overweight cash owing to their bearish view on the markets, and 20% expressed a preference for cash over low-yielding assets.

The survey’s cash rule says that when average cash balance rises above 4.5%, a contrarian buy signal is generated for equities; when the cash balance falls below 3.5%, a contrarian sell signal is generated.

The survey, which was conducted during the second week in July, comprised 207 panelists with $586 billion in assets under management

A net 48% of investors surveyed said global monetary policy was “too stimulative,” the highest number since April 2011.

Investors’ concern about Chinese credit tightening as a major tail risk receded in July, with just 15% considering it a top risk, half the number in the June survey.

Twenty-eight percent of respondents in July considered a crash in global bond markets the biggest tail risk, followed by 27% who worried about a policy mistake by the Federal Reserve/European Central Bank.

“Fund managers’ biggest fears are a shock coming from bond markets or central banks,” said BofAML’s chief investment strategist Michael Hartnett said in a statement. “Too many investors see the Fed as a likely negative catalyst.”

As for the Fed’s balance sheet reduction this year, 42% of investors said it would be a non-event, while 31% viewed it as a risk-off event, sending yields up and stocks down.

Thirty-eight percent of investors, the same as last month, said long Nasdaq was the most crowded trade in July.

Long U.S./EU corporate bonds and long Eurozone equities trailed, cited by 15% and 12% of respondents.

Expectations that corporate profits will improve over the next 12 months fell to net 41%, down two percentage points from June and the lowest level since November’s U.S. elections.

Profit expectations are rolling over, as 41% say profits will improve over the next 12 months, down 2 percentage points from June to the lowest level since the US election.

At the same time, the earnings outlook continued to darken. A net 22% of respondents said they did not expect corporate earnings to improve substantially over the next 12 months.

Moreover, a net 17% said corporate balance sheets were overleveraged, the highest since April 2009, according to BofAML.

Allocation to U.S. equities dropped to a net 20% underweight in the July survey. The last time investors were more underweight U.S. stocks was in January 2008.

Allocation to Eurozone equities fell to net 54% overweight from net 58% overweight last month, not far off two-year highs.

Investors are becoming skeptical about further improvements in Europe, according to the survey. A net 51% of respondents expected the European economy to strengthen over the next 12 months, down from net 61% in June.

Ronan Carr, BofAML’s European equity strategist, said “investors expect Eurozone inflation to rise and find monetary policy too stimulative, putting the ECB’s signaling powers to the test.”

Allocations to Japan equities shot up to net 18% overweight in the new survey, from just net 1% overweight in June.