nvestor expectations for economic growth and profit have double-dipped, according to Bank of America-Merrill Lynch's latest fund survey.
The survey released Tuesday found that fund managers turned bearish in their outlook on the global economy and corporate earnings for the first time since February 2009.
Investors said they were more concerned about the outlook for US stocks now than at any other point since November 2006.
A recent string of weak US economic data raised speculation the recovery may be losing momentum, with June nonfarm payrolls falling by the largest number since October.
But others are less bearish, with IMF chief Dominique Strauss-Kahn playing down the possiblity of a double-dip recession Tuesday.
For the first time in over a year, investors expect corporate profits to weaken. Asset allocations towards pharmaceuticals, a classic defensive sector, increased to the highest level since March 2009, according to the survey.
On Monday, US aluminum maker Alcoa (NYSE: aa) kicked off the second quarter earnings season with a return to profit.
"July's survey echoes the sentiment that investors expressed during the recession in early 2009," said Gary Baker, head of European equity strategy at BofA Merrill Lynch Global Research.
And while investors have become more risk averse, Baker suggested that if upcoming economic data fails to confirm the double-dip that fund managers are expecting, risk assets will have a much better third quarter.
A total of 202 fund managers, managing a total of $530 billion, participated in the survey from July 1 to July 8.