Fund Managers Hold Biggest Wad of Cash Since Lehman Bros Collapse

Cash holdings among global investors are at their highest point since the 2008 financial meltdown, the latest Bank of America Merrill Lynch survey shows.

The BofAML fund manager survey was conducted from July 2 to July 9, and the results reflect the weaker global economic outlook, particularly in China and Greece.

Among the 191 respondents – who hold a collective $510 billion in assets under management – 42% of investors said they expect the global economy to strengthen over next year, down from 55% a month ago.

As a result, cash levels jumped to 5.5%, the highest since December 2008, when the world was still in the midst of a major financial crisis sparked by the collapse of Lehman Brothers.

"When average cash balance rises above 4.5%, a contrarian buy signal is generated for equities. When the cash balance falls below 3.5% a contrarian sell signal is generated," BofAML Chief Investment Strategist Michael Hartnett said in a release.

The survey also showed the highest percentage of investors taking out protection against a fall in equities since February 2008.