A net 75 per cent of the fund managers surveyed in August across the globe believe the world economy would strengthen in the coming 12 months -- the highest reading since November 2003. The reading has significantly increased from 63 per cent in July, the report said.
Moreover, confidence about corporate health is at its highest since January 2004, and a net 70 per cent of the panel respondents expect global corporate profits to rise in the coming year, up from 51 per cent last month.
The August survey revealed that investors were matching their sentiment with action, by investing in equity market. The average cash balances have fallen to 3.5 per cent from 4.7 per cent in July, their lowest level since July 2007.
Further, equity allocations have risen sharply month-over-month and Merrill Lynch's Risk and Liquidity Indicator, which measures risk appetites, has also risen to a two-year high of 41.
"Strong optimism in August represents a big turnaround from the apocalyptic bearishness of March. And yet with four out of five investors predicting below trend growth for the year ahead, a nagging lack of conviction about the durability of the recovery remains," Banc of America Securities-Merrill Lynch Research chief global equities strategist Michael Hartnett said.
"The equity rally has been narrowly led by China and tech stocks. We have yet to see investors fully embrace cyclical regions such as Japan or Europe, or Western bank stocks," Hartnett added.
A total of 204 fund managers, managing a total of $554 billion, participated in the global survey from August 7 to August 12.
In terms of sectors technology remains the number one sector, with 28 per cent of the global fund managers panel being preferring on the industry. However, global fund managers remain concerned about the banking sector. In contrast, investors within emerging markets are positive about banks.
Image: The Bombay Stock Exchange