Almost half of fund managers surveyed in the latest Bank of America Merrill Lynch (BofAML) survey are predicting a recession in 2020.
The latest monthly global survey questioned 223 fund managers with $643bn in assets under management between 4 and 10 May.
It found the percentage of investors expecting a recession this year was 2% and instead, the consensus was for a recession in the first quarter of 2020. Some 43% thought it would be 2020 while 41% thought it would be 2019.
However, sentiment still remains low with growth optimism reaching the lowest level in two years - just net 1% of investors predicting the global economy will strengthen over the next 12 months. This was down from net 5% in April.
The threat of a policy mistake by the Federal Reserve or European Central Bank was the biggest tail risk for investors at 30% followed by trade war concerns at 25%, and 12% worried about geopolitics causing oil to reach $100 per barrel.
Looking at sectors, investors favoured banks, technology and energy while avoiding staples, telecoms and utilities. The allocation to banks, in particular, has risen to a net 36% overweight, which is the second-highest level on record.
Michael Hartnett, chief investment strategist at BofAML, said: "This month's survey presents good and bad news. Although cash levels remain high and growth optimism is at its lowest levels in over two years, a majority of investors say there is room to grow in this equity bull market and do not see signs of recession anytime soon. Fund managers think the May rally can extend in the near-term."
Meanwhile, the average cash balance fell from 5% in April to 4.9%, above the ten-year average of 4.5%.
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