Global fund managers have been the most active since the global financial crisis in taking out protection against stock volatility, a Bank of America Merrill Lynch survey* has revealed.

As of July, 25% of the 149 fund managers surveyed in BAML’s monthly poll said they had taken out protection against a sharp fall in equity markets over the next three months.

Meanwhile, cash within funds has soared to levels not seen since December 2008, with the average cash held by funds standing at 5.5%, although BAML suggested that a figure above 4.5% signals a contrarian buy signal.

This comes as the surveyed fund managers, who manage $399 billion of assets in total, see an increase in global risk, with 26% of those surveyed fearing a eurozone breakdown.

While Greece has finally agreed to controversial economic reforms to secure a €82 billion bailout and keep the euro, the International Monetary Fund has said it may not accept the deal if Athens is not offered debt relief by its European partners.

China has also been raised as a worrying risk for fund managers - 71% of those surveyed believe that China is now in a bubble, a two percentage point increase from the previous survey in June. This coincides with a drop of 26% since the Shanghai composite index peaked on June 12.

The result is in part fuelled by worsening Chinese growth expectations, with a net 60% of fund managers not expecting a stronger economy. Fund managers on average believe that China’s GDP growth will slow to 6.5% over the next 12 months, below the “around 7%” GDP growth predicted by Beijing.

Data released by Beijing however has shown that the Chinese economy grew by 7% year on year, ahead of a 6.8% forecast predicted by some analysts.

In allocation terms, a net 20% of fund managers said that they are now underweight in emerging market equities, which is a 16-month low.

Japanese equities meanwhile remain highly overweight, with a net 37% of global fund managers still overweighting them, although this is down from 40% overweight in June.

Similarly, eurozone equities have fallen to net 40% overweight amongst surveyed money managers, compared to 46% overweight last month.

Fund managers’ US equity holdings meanwhile have improved to a five-month high of 7% underweight, from net 10% underweight last month.

* A total of 149 managers, managing US$399 billion, participated in the global survey from July 2-9. A total of 90 managers, managing US$196 billion, participated in the regional surveys.