Institutional investors remain optimistic about the global economic outlook, but they don’t expect growth to match historical averages, Merrill Lynch found in a survey of 423 fund managers overseeing a total of more than $1 trillion in assets.

Seventy-two percent expect the world economy to strengthen in the next year, but the same number of people say the growth will be below historical trend.

Despite this optimism, cash levels in fund managers’ portfolios edged up to 4.1%, from 3.7% in August, and the proportion of asset allocators overweight equities slipped to a net 27% from 34% in August.

“September’s jump in cash levels and lower equity exposure shows that investors’ risk appetite lags their confidence in the economy,”  said Gary Baker, head of European equity strategy at Banc of America Securities-Merrill Lynch Research. “The consensus expects a global recovery but expects it to be below trend and not inflationary,” added Michael Hartnett, chief global equities strategist at the firm.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.