LONDON Investors pumped up their exposure to stocks in early April despite some concern that global growth will tail off, a Bank of America-Merrill Lynch poll showed on Tuesday.
The investment bank's monthly survey of 282 fund managers found a net 50 percent to be overweight in equities compared with a net 45 percent in March.
Cash holdings dropped to a net 10 percent overweight compared with 14 percent a month earlier. Bonds continued to be unpopular with a net 58 percent underweight, albeit a slight improvement from March's 59 percent.
The growing risk appetite reflected by these numbers, however, comes against a backdrop of easing expectations about the global economy.
Although still above the long-term average reading, the survey's growth expectations composite -- essentially the view on global growth -- dropped to 62 from 66 in March.
"As much as global investors are struggling with the growth outlook ... they see very little alternative to equities," said Gary Baker, BofA-Merrill's head of European equity strategy.
Such bullishness was also reflected among hedge funds, which reported a 1:49 ratio of capital to gross assets, compared with March's 1:33 ratio.
This essentially means that hedge funds are becoming more optimistic and increasing their leverage, BofA-Merrill said.
Much of the reason for optimism is the continued loose monetary policy of central banks, most notably the U.S. Federal Reserve.
A net 51 percent of respondents said monetary policy was actually too stimulative.
Baker said that not buying risk against this "monetary backstop" was too tough to fight.
Regionally, the fund managers sharply cut back on their exposure to Japanese equities in early April, following the earthquake, tsunami and nuclear disasters.
The poll showed a net 18 percent now underweight compared with a net 8 percent overweight a month ago.
Instead, they returned to emerging markets robustly, lifting exposure to a net 22 percent overweight from neutral a month earlier.
The United States remained the most favored region at 30 percent overweight, with Europe at neutral.
(Editing by Stephen Nisbet)