It's no wonder growth expectations among big global and regional institutional investors have slumped in recent months.

China is slowing, the US has slowed, even growth in Australia is trending lower, while Europe remains on everyone's watch list for a double dip, as does Japan.

According to the latest Bank of America-Merrill Lynch monthly survey of fund managers (issued this week) a net 12%of the 202 managers surveyed said they believed the global economy would deteriorate over the next year.

That signifies a "double dip" in expectations after the previous monthly survey had registered a net 24% answering positively to the same question. It was the first negative forecast since February 2009.

But there's still not a majority of the fund managers surveyed who expect another global recession.

"It's actually the rate of change they are talking about," said Gary Baker, head of European equity strategy at Bank of America Merrill Lynch.

"Two-thirds of investors say they don't see us tipping back into recession."

What was surprising in the latest survey was how pessimism towards the US recovery has taken hold.

A net 14% of fund managers surveyed said the US was the region where they would most like to be underweight.

That's the glummest sentiment since November 2006, especially in view of the June survey which had revealed a net 14% saying it was the region they most wanted to be overweight.

"While the absolute outlook within Europe is among the gloomiest regions, it actually deteriorated by less than that for the US over the month," said the report.

Emerging markets saw gains in sentiment among the big fund managers.

A net 34% of global asset managers were overweight in emerging markets, up from 19% in May. That's despite continuing reservations about China and Europe.

The eurozone has also seen investors move back into the region in spite of the obvious fears about its economic future.

The proportion of fund managers underweight in eurozone equities fell to a net 10% in the latest survey, down from 27% in June.

Investor risk appetite has fallen alongside the drop in confidence.

Cash now makes up 4.4% of the average portfolio, up from May when it was 4.1%.

A net 39% of the panel is taking lower than normal risk; more than double the proportion in May.

Allocations towards pharmaceuticals, a classic bear market sector, increased to the highest level since March 2009.

"July's survey echoes the sentiment that investors expressed during the recession in early 2009," according to Mr Baker.

Growth and profit expectations have double-dipped. Should upcoming data fail to confirm a double-dip, risk assets will have a much better third quarter," said Michael Hartnett, chief Global Equity strategist at BofA Merrill Lynch Global Research.

Fund managers have moved away from equities into bonds over the past two months, with managers overweight in equities slipping from 30% in May to 11% in June.

But in spite of investors being a lot more cautious about growth, they still see equities as undervalued compared with bonds.

(That's not hard to understand given that the bond market rally was happening well before many of these big investors got cold feet and went into cash or into bonds. Many came to bonds late in the current rally).

A net 4% of the panel expects corporate profits to worsen in the coming year, also the first negative outlook in more than a year.

It compares with a net 28% forecasting earnings growth just last month.

A net 1% says that profit margins will fall in the coming year, compared with a net 31% predicting improved margins in May.

This risk aversion is not restricted to long-only investors. Hedge funds have reduced their net equity exposure to its lowest since March 2009.

And the survey reveals that four out of 10 investors polled believe there will be no Fed rate hike for a year. Only 4% predict a rate rise this year.

(After the latest Fed minutes that will be a view that will increase).

Inflation concerns have eased as sharply as growth concerns have appeared. With a net 12% of investors predict inflation to fall in the coming year, a turnaround from June when a net 12% were forecasting higher inflation.

The Regional Survey shows 47% of European investors predict no rate hike from the ECB before July 2011.

A total of 202 fund managers, managing a total of US$530 billion, participated in the global survey from 1 July to 8 July. A total of 170 managers, managing US$393 billion, participated in the regional surveys.