Global fund managers are the most pessimistic on world economic growth since the financial crisis, according to Bank of America Merrill Lynch's benchmark monthly survey, although most are holding equity positions steady even amid concerns that corporate profits will slow and activity will ease amid the ongoing U.S.-China trade war.

The October edition of BAML's Fund Manager Survey, which polled 231 investment managers who run more than $646 billion worth of assets, noted that investors are also holding cash positions steady in their portfolios at 5.1%, the highest in 18 months, and still consider a global trade war the biggest "tail risk" for the market for the sixth consecutive month. That said, allocation to global stocks is relatively stable at a net 22% overweight, but investors are starting to shed U.S. stocks into the final months of the year.

"Investors are bearish on global growth," said chief investment strategist Michael Hartnett. "But not bearish enough to signal anything but a short-term bounce in risk assets."

A record 85% of the survey respondents said the global economy is in the later stages of its growth cycle, a figure that is some 11 percentage points higher than the previous high of December 2007. When asked how the global economy will develop over the next year, a net 38% said they expect a slowdown, and that's the worst outlook on global growth since November 2008.

Last week, the International Monetary Fund said trade tensions between Washington and Beijing, alongside tighter financing conditions in emerging markets and uncertainty in Europe, will weigh on growth this year and next, while the bump from fiscal stimulus in the United States will fade just as higher borrowing costs begin to crimp consumer demand in the red-hot U.S. economy.

"U.S. growth will decline once parts of its fiscal stimulus go into reverse," said IMF chief economist Maurice Obstfeld . "Notwithstanding the present demand momentum, we have downgraded our 2019 U.S. growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China's retaliation."

The Fund's global growth assessment was trimmed by 2 percentage points to 3.7% for this year and next, while its World Economic Outlook update said U.S. growth will likely hit 2.7% next year, down from a previous assessment of 2.9%. China's economy, the second largest in the world, will ease to 6.2% from a previous forecast of 6.4%. Both the U.S. and China assessments for 2018 were left unchanged and 2.9% and 6.6% respectively, with the Fund saying that tit-for-tat tariffs, currently applied to around $300 billion worth of goods, likely won't hit growth metrics until 2019.

"This month, trade war remains the biggest "tail risk" for FMS investors, although conviction fell for the thirdmonth in a row as concerns about Quantitative Tightening rise; note July was the highest reading sinceconcerns surrounding EU sovereign debt funding in Jul '12," the survey noted.

The growth concerns have fund managers trimming expectations for corporate profits, as well, with a net 20% of respondents seeing a slowdown for next year. In fact, a net 35% don't expect corporate profits to rise more than 10% next year, compared to the same amount that were predicting 2019 improvement when polled in February.

Tech stocks remain the favorite trade in the survey, BAML noted, with the so-called "long FAANG+BAT" trade -- a reference to a group of stocks that includes Action Alerts Plus holdings Facebook Inc. (FB - Get Report) , Amazon Inc. (AMZN - Get Report) , Apple Inc. (AAPL - Get Report) as well as Netflix Inc. (NFLX - Get Report) , Google parent Alphabet (GOOGL - Get Report) as well as Asia tech giants Baidu Inc (BIDU - Get Report) , Alibaba Group Holding (BABA - Get Report) and Tencent Holdings Ltd. (TCEHY) -- topping the survey for a ninth consecutive month.

Shorting U.S. Treasury bonds is also a popular trade, the survey noted, with allocations to the sector slipping to a a net 19% underweight. Long positions in the S&P 500, which has gained just 2.94% so far this year, rose to a net 18%.