A net 39 per cent of fund managers forecast that profits worldwide will improve in the next 12 months, up from 29 per cent in January and the highest reading in two years.
Despite that, allocation to stocks remained unchanged from January with a net 51 per cent of investors overweight.
Allocation moves within the sector showed risk appetite easing with defensive sector pharmaceuticals returning to top spot, while the biggest month-on-month faller was technology.
“We’ve had consolidation of the level of optimism, but when we look into that, folks are still quite circumspect,” said John Bilton, the bank’s European investment strategist.
“Investors want to see proof of earnings coming through and they want to see proof that firms are beginning to consider re-deploying their cash to capex before we really see that net surge higher in terms of positioning to match the sentiment.”
Investors cut their overweight to European equity to 15 per cent from 8 per cent last month, close to a 10-year average of 10 per cent.
They maintained their overweight on European banks while overweight to European cars picked up to 22 per cent, a sign for Bank of America/Merrill Lynch of continuing interest in European stocks despite a strong euro.