According to the BofA Merrill Lynch Fund Manager Survey for October, investors are expressing growing skepticism that the U.S. Federal Reserve (Fed) will raise rates this year amid fragility in the global economy and earnings.

• Fewer than half (47%) of investors believe the Fed will raise rates in 2015, down from 58% in September.
• A net 19% of the panel says global fiscal policy is too restrictive.
• Cash balances fell to 5.1% of portfolios, down from 5.5% last month, but remain above historic average levels.
• A growing majority of investors (net 26%) say that corporate operating margins will decrease in the coming year, up from a net 18%.
• Short Emerging Market Equities was named the most crowded trade in October by 23% of the panel, up from 20%.
• China is seen as the greatest “tail risk” by 39% of the panel, down from 54% in September, while pessimism over Chinese equities eased.

“As investors debate the timing of a rate hike, they should be anticipating a massive policy shift in the U.S., Europe and Japan from QE to fiscal stimulus in 2016,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.

Fund Manager Survey

An overall total of 209 panelists with $512 billion of assets under management participated in the survey October 2–8, 2015. A total of 164 managers, managing $401 billion, participated in the global survey. A total of 102 managers, managing $213 billion, participated in the regional surveys.