Amid concerns about China specifically, and emerging markets generally, fund managers’ confidence in the global economic outlook has dropped, as has their appetite for risk, reports BofA Merrill Lynch.

According to the BofA Merrill Lynch Fund Manager Survey for September, the appetite for risk among global investors has declined in the past month. Equity overweights are down a net 24 percentage points from the previous survey, according to the survey, and investor sentiment towards global emerging markets has soured further, with underweights at a record net 34%.

In the current climate of heightened volatility and uncertainty, fund managers are turning to cash, with cash balances up to 2008 levels of 5.5%, the survey says.

The threat of recession in China is seen as the biggest tail risk among global fund managers, the survey notes, and concern over a potential emerging markets debt crisis has also risen sharply.

Given this market environment, investors’ expectation for the U.S. Federal Reserve Board to begin hiking interests rates has been pushed off to the fourth quarter, the survey says.

“Investors were already positioned for lower growth in China and emerging markets, but their risk-off stance has intensified. Contrarians will be noting the aggressive underweight positioning in emerging markets,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, in a statement.

The survey, based on responses from 214 panelists with US$593 billion of assets under management, was carried out between Sept. 4 and 10.