Investors increased their cash allocation and reduced their overweight equity positions in August as global growth expectations fell to their lowest level in eight months, according to a Bank of America (BAC) survey of fund managers released on Tuesday.

According to the survey, 31 percent of respondents said they were overweight in equities in August, up from 51 percent in July, while their average cash holdings accounted for 4.3 percent of their assets under management, up from 4.1 percent the previous month.

BofA attributed the change to weak US jobs data for July and the volatility shock associated with the recovery in the Japanese yen.

The S&P 500 (^GSPC) is down 3.6 percent so far this month, falling 2.7 percent on payroll day and another 2 percent in the following session after Japan’s Nikkei stock index fell by the most in one day since 1987.

Market participants also pointed out that the recovery of the yen and the resulting unwinding of carry trades, with which investors sought to increase their bets, were the reason for the wave of selling.

However, stock prices worldwide have recovered in recent trading days.

According to BofA, 189 respondents with $508 billion in assets under management took part in the survey, and on balance 47 percent of respondents expect the global economy to slow over the next 12 months, down 20 percentage points from July.

However, 76 percent of survey respondents said they still expect a “soft landing” for the global economy. By this they mean a gradual slowdown, as opposed to a more dramatic “hard landing” or a no-landing scenario in which there is no slowdown in growth at all.

This belief is “driven by expectations of lower interest rates,” BofA said. 93 percent of respondents expected short-term interest rates to be lower in the next 12 months, the highest level in 24 years.

The survey shows that 60 percent of respondents expect the US Federal Reserve to cut interest rates four or more times in the next twelve months.

Allocation to Japanese equities saw its biggest one-month decline since April 16. Investors moved from a net overweight of 7% in July to a net underweight of 9% in August, the first net underweight since July 2023.

(Reporting by Alun John; Editing by Dhara Ranasinghe and Sharon Singleton)