Recession-wary managers prefer bonds

Merrill Lynch's monthly survey of global fund managers — conducted between the Fed's rescue of Fannie and Freddie and Lehman's bankruptcy announcement — found bonds are at their highest level in a decade. Liquidity is a top concern, with 39 percent of survey respondents rating those conditions as negative, double the number who reported the same sentiment in August.

Risk-averse investors are avoiding emerging markets and European investments. Falling commodity prices, global growth concerns and inflation fears in emerging markets contributed to the largest underweight position in emerging market equities since 2001, the survey found, and 50 percent of managers are underweight Europe.