Investors haven't been this bearish on stocks since early-2009 when the world was in the throes of the financial crisis triggered by the Lehman Brothers collapse, Bank of America Merrill Lynch's (BAML) June fund manager survey showed.

Results of the monthly survey, released on Tuesday, showed funds' allocation to global equities dropped by 32 percentage points from May to a net 21 per cent underweight. This is the lowest allocation to stocks since March 2009 and the second-biggest one-month drop on record.

Bond allocations meanwhile jumped by 12 percentage points to the highest since September 2011, as dovish signals from central banks and rock-bottom inflation expectations triggered a U-turn in the market's interest rate outlook.

Investors said US government bonds were the “most crowded” trade for the first time in the survey's history, while 56 per cent of respondents named trade war as the top risk to markets. The percentage of investors expecting higher short-dated interest rates fell to its lowest level since 2008, the survey found.

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