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Investors bought into the October market correction, increasing their exposure to U.S. and emerging markets stocks, as well as to REITs and health care, according to the November Bank of America Merrill Lynch fund manager survey.

Investors’ allocation to U.S. equities have seesawed in recent months; in November, it was net 14% overweight, up 10 percentage points from October, making the U.S. again the most-favored equity region.

Allocation to the global tech sector collapsed to the lowest level since February 2009, as only 18% of investors said they were overweight the sector.

Fund managers’ average cash balance dropped sharply in November to 4.7% from last month’s level of 5.1%. It now hovers just above neutral, but investors remain bearish.

The fund manager cash rule holds 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.

“We remain bearish, as investor positioning does not yet signal ‘The Big Low’ in asset markets,” said Michael Hartnett, Merrill’s chief investment strategist, said in a statement.

(Related: 3 Ways to ‘Bear-Market Proof’ Your Business)

Merrill conducted the latest fund manager survey in early November among 225 panelists with a total of $641 billion in assets under management.

Net 44% of fund managers said they expected global growth to decelerate in the next 12 months, the worst outlook on the global economy since November 2008, according to Merrill. Fifty-four percent said they anticipated a slowdown in Chinese growth in the next year, the most bearish outlook in more than two years.

Asked at what level the S&P 500 would peak during the current bull run, investors indicated a level of 3,056 (weighted average), up 12% from today’s level — the index closed at 2,726.22 on Tuesday. However, one in three respondents said U.S. stocks had already peaked.

Investors’ negative outlook on corporates continued into November. Net 29% thought global profits would deteriorate over the next 12 months (a six-year low), while 47% expected corporate margins to worsen in the next year.

Fund managers have been worried about a trade war for the past six months, and in November that concern topped the list of biggest tail risks, cited by 35% of respondents. Quantitative tightening and a slowdown in China followed, worrying 26% and 14% of managers.

Long FAANG (Facebook, Apple, Amazon, Netflix and Google’s parent Alphabet) + BAT (Baidu, Alibaba and Tencent) hung onto its crown as the most crowded trade for the 10th straight month in November, cited by 29% of investors. Short U.S. Treasuries and long U.S. dollar came in second and third.

As part of the November survey, Merrill asked fund managers about their economic and market expectations for next year.

Only 11% of respondents said they expected a global recession in 2019. Forty-five percent predicted that non-U.S. equities would be the best-performing asset, while a quarter said corporate and government bonds would be the worst.

Passive Investing and ETFs

Eighty-three percent of November’s participants responded to the fund manager poll’s new section on passive instruments and exchange-traded funds, 47% of which said they actively used ETFs within their portfolios.

Merrill reported that 20% (weighted average) of fund managers’ assets were allocated to ETFs. Only 10% of respondents said they invested more than 41% of their portfolios in ETFs, three points higher than the allocation of the firm’s private clients.

Eighty-three percent of investors reported that they used ETFs to gain equity market exposure, versus 4% for corporate bonds and 4% for government bonds.

Sixty-nine percent used ETFs to passively track broad equity market indexes, the lowest level since May, according to Merrill. Smart beta and ESG/thematics brought up the rear at 12% and 4% usage.

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