Growing fears of a hard landing for China’s economy have further marginalized emerging market equities. But investors have sent a clear signal that sentiment toward developed world equities remains strong, according to the BofA Merrill Lynch Fund Manager Survey for February. A growing proportion of investors – 46 percent in February – say that a China hard landing and commodity collapse represents the biggest tail risk to the global economy. That figure compares with 37 percent in January and 26 percent in December. Belief in global economic growth has moderated. A net 56 percent expects the global economy to strengthen in the coming 12 months, down 19 percentage points from a net 75 percent last month. Global equity allocations are down; a net 45 percent of asset allocators say they are overweight equities, down from a net 55 percent in January. Average cash balances have increased to their highest level since July 2012 of 4.8 percent of portfolios, up from 4.5 percent. But regional data shows that concerns are focused on Global Emerging Markets (GEM), while optimism towards Europe and the U.S. remains strong. Allocations to GEM have reached a record low with a net 29 percent of asset allocators underweight the region. At the same time, a record net 40 percent of the global investor panel says that the eurozone is the region they most would like to overweight in the coming 12 months. U.S. equities are becoming more popular – a net 11 percent of asset allocators are overweight the U.S., up from a net 5 percent a month ago. “High cash levels, at 4.8 percent of portfolios, are sending an unambiguous ‘buy’ signal for risk assets,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research. “Investors remain firmly bullish towards developed markets and Europe in particular. But we would caution that current valuations in Europe already fully price in the region’s growth outlook,” said John Bilton, European investment strategist.