FTAdviser.com

Advertising

In its July survey, the group questioned more than 300 fund managers and found risk appetite was lower than ever, with 53 per cent of managers overweight cash and 40 per cent underweight equities.

Despite the growing aversion to equities, only 16 per cent of those questioned said they were now finding the asset class cheap.

The survey also found managers were negative on the eurozone, with 96 per cent believing Europe’s economy would weaken over the next 12 months, a 10 per cent increase from June.

To counter this, managers are pushing investors into healthcare stocks, a traditional safe haven from wider economic trends. One-third of those surveyed said they have a net overweight position in healthcare and pharmaceuticals, compared with zero in June.

Karen Olney, chief European equities strategist at Merrill Lynch, said: "What investors are looking for right now is immunity from the ills of the market, and the healthcare sector provides that.

"Healthcare companies might have their own industry risks, but they do offer immunity from the three horrors that are bugging investors – a rising oil price, the slowing economic cycle and the credit crisis."

However, the survey also revealed a negative view on emerging markets equities. In the May survey, a net 31 per cent of fund managers were overweight emerging markets. This month, however, only a net 4 per cent have a positive stance toward the region.

Merrill Lynch said investors were increasingly concerned rising inflation in emerging markets would make the region more vulnerable to monetary tightening and slowing domestic demand.