Cash was king in July, with global investors battening down the hatches amidst Greek uncertainty and a tumble in Chinese stocks, according to the findings of BOA Merrill Lynch's fund managers survey released Tuesday.
Cash levels soared to 5.5% this month from what was already a six-month high of 4.9% in June. These are the highest cash levels seen since December 2008, and before that November 2001, the survey said.
In July, a "Eurozone breakdown" led the list of biggest "tail risk" fears, with "China debt defaults" and "Geopolitical crisis" in second and third place.
Last month, in order of greatest concern, the market fretted "Geopolitics," "Fed-behind-the-curve," then "Eurozone breakdown."
On asset allocation, a net 42% of portfolio managers were overweight stocks in July, compared to a net 38% overweight in June, which was a six-month low in terms of allocation, and a net 47% in May.
At the same time, the percentage of PMs who took out protection against a equity fall in the next three months was at the highest seen since February 2008.
In July, a net 31% of those polled said they hedged their stock holdings and a net 55% saying they have not, leaving the percent of hedging at a net -24%.
A net 60% of those polled were underweight bonds this month, versus a net 58% underweight in June and a net 60% underweight in May, which was a nine-month low at the time.
A net 22% of fund managers were underweight commodities in July, compared to a net 11% underweight in June, which was a ten-month high, and a net 14% underweight in May. Commodities interest troughed back in December 2014, when a net 26% of those polled were underweight.
In terms of regional equity allocation, global investors trimmed their eurozone holdings and looked more favorably at the U.S.
A net 40% of managers were overweight eurozone equities in July, versus a net 46% overweight in June and a net 49% overweight in May.
"Allocation to U.S. equities improves to a five-month high reading of a net 7% underweight" in July, from a net 10% underweight in June and a 19% underweight in May, BOA Merrril said.
This month, a net 37% of those polled were overweight Japanese equities, a five-month low reading, down from a net 40% overweight in June and a net 42% overweight in May.
Emerging markets remained unloved, with a net 20% of managers now underweight EM equities, a 16-month low. In June, a net 18% of those polled were underweight EM stocks and in May, a net six percent of those polled were underweight EM stocks.
The current allocation "is a hefty 1.9 standard deviations below its long-term average," the survey said.
This month, BOA Merrill Lynch offered a special section on FX.
The dollar was deemed as being the "most undervalued" in seven months, with a net 23% of portfolio managers having that view.
The euro was seen as being the "most overvalued" in five months, with a net 23% of those polled having that view.
The yen was seen as the most undervalued since 2008, with a net 3% having that view.
However, on a Greek resolution, such safe-havens as yen and gold, which have been undervalued could "get even cheaper," the survey said.
BOA Merrill Lynch's 12-month forecasts saw U.S. GDP at 2.4%, China GDP at 6.5% and the euro at $1.04 versus the dollar and Fed lift-off expectations shifted from third quarter to fourth quarter.
A total of 191 panelists, with $510 billion in assets under management, took part in the survey, taken July 2-9. A total of 149 participants with $399 billion in AUM responded to the global FMS questions and 90 participants with $196 billion in AUM responded to the regions FMS questions.