With news about China's slowing economy making daily headlines, investors' confidence in the global economic outlook has grown significantly more pessimistic, according to Bank of America Merrill Lynch's latest fund manager survey, released Wednesday.
Allocations to equities have plummeted, and cash holdings have risen, the survey found.
An total of 211 panelists managing $610 billion of assets took part in the survey from Jan. 8 to Jan. 14.
The poll found that a net 8% of fund managers thought the global economy would strengthen over the next 12 months, down from 29% in December — the survey's lowest reading on this measure since 2012.
Even so, only 12% of panelists expected a global recession in the next 12 months.
Investors have not yet become "max bearish," Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, said in a statement.
"They have yet to accept that we are already well into a normal, cyclical recession/bear market."
Survey respondents' risk aversion continued to increase, however. Average cash balances rose to 5.4% in January, the third-highest reading since 2009, from 5.2% in December and 4.9% in November.
A net 38% of investors are now overweight cash, versus a net 20% last month.
Bond underweights retreated from net 64% last month to 47% in January.
A slowdown in China was on investors' minds, as 45% now considered this the biggest "tail risk" by far. Twenty-two percent worried about emerging market debt, and 14% about geopolitics.
