Investors are far less bullish on global growth and profit expectations, according to Bank of America's July Global Fund Manager Survey.
Of the 239 fund managers overseeing a total of $742 billion in assets surveyed, global growth expectations have dropped 28 percentage points on a month-over-month basis to net 47% in July, down from the peak of 91% in March.
Profit expectations have also peaked, now at net 53% among survey respondents, down 14 percentage points from June and down from the 89% peak in March.
In addition, inflation expectations among fund managers have also dropped considerably, with net 22% of saying they expect higher inflation in the next 12 months, down 42% from the previous month's survey.
Meanwhile, 73% of survey respondents believe the economy is mid- or late-cycle, up 9 percentage points from last month.
When asked how big an equity correction will be likely in the next 6 months, more than half (54%) said they expect one that's less than 10%, while 23% expect a correction that's less than 15%. Only 3% of investors expect a bear market in the next 6 months.
Cash levels inched up month over month to 4.1% in July from 3.9% in June.
Asset allocation to equities dropped 3 percentage points month over month to net 58% overweight. Meanwhile, allocation to bonds increased 1 percentage point to net 68% underweight.
Inflation tops the list of biggest tails risks for fund managers, at 29%; followed by a "taper tantrum" (26%) and asset bubbles (15%).