According to the BofA Merrill Lynch fund manager survey for October, investors are concerned that global economic recovery could falter, while emerging market confidence have started to rebuild.

As per the survey, in October, only 54 per cent of investors believed that the global economy will strengthen, while, in September the figure touched as high as 69 per cent.

A net 71 per cent expect the economic growth to remain "below trend" in the coming 12 months' time, up from a net 61 per cent a month ago.

It should be noted that the survey was done from October 4 to October 10 -- the crucial period when the US economy was going through "shutdown" that ended on Wednesday.

"Events in Washington clearly caused investors to shift back towards their benchmarks, but asset price gains can still be driven by high cash levels," BofA Merrill Lynch Global Research chief investment strategist Michael Hartnett said.

The report further said that "investors and asset allocators have increased allocations towards global emerging market equities and have indicated in October's survey that they see value in the region."

A net 38 per cent of the global respondents said that emerging markets equities are the most undervalued of all the regions - in contrast, a net 63 per cent said the US is the most overvalued region.

Moreover, the number of investors who plan to reduce their holding in emerging markets continued to fall, it added.

Expectations for a recovery in corporate profits globally have also fallen. Last month, a net 41 per cent said they expected corporate profits worldwide to improve in the following 12 months - that figure has tumbled to a net 28 per cent in October.

Moreover, a net 18 per cent believe that corporate profit margins will decrease in the coming year, up from a net 11 per cent a month ago.

Meanwhile, however, investors sentiment towards Europe has improved and equity allocation to the region reached a six-year high.

"Global investors' outlook for European corporate profits has continued to rise uninterrupted by events in Washington. It is now at its most positive level since September 2007," the survey said.

A total of 235 panelists with USD 643 billion of assets under management participated in the survey from 4 October to 10 October 2013.

PTI