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The European Central Bank (ECB) is the most likely trigger of a selloff, according to a leading survey of fund managers.

Managers told Bank of America Merrill Lynch’s (BoAML) monthly sentiment and positioning survey that the risk of a policy mistake from the US Federal Reserve or the ECB was the second biggest tail risk, after a bond market crash.

In addition, respondents said euro-zone equities and EU and US credit were among the most crowded trades, which BoAML said meant the ECB was the “most likely central bank to spark global ‘risk-off’” scenario.

BoAML’s researchers said: “The persistent overweight in euro-zone versus US equities could be more bad news for European investors. The three-month average for allocation [to Europe] is above 50% and, at 57%, is a record high. This is often a contrarian signal.”

Euro-zone equities have “struggled” relative to US equities, BoAML added. Average allocations to Europe have reduced slightly since May, but the researchers said they remained positive in the short term on the region, citing the economic backdrop and expected free cash flow growth.

A majority of those surveyed (42%) said that the Fed’s planned reduction of its quantitative easing programme this year would be a “non-event”. Roughly a third (31%) said it would send bond yields up and stock prices down.

“Yet until 10-year Treasury yields climb the wall of 3%, few investors think Treasuries will cause an equity bear market,” BoAML’s researchers said.

The survey also showed that the sample of 179 managers had their highest net underweight position in US stocks since January 2008. The UK was managers’ biggest underweight relative to the survey’s history.

During June, US tech stocks were among the most sold sector: 68% of respondents said US and global internet stocks were “expensive”. A further 12% said the sector was “bubble-like”.

Since 2009, technology has been the most popular sector in 80% of BoAML’s surveys, the company said.

Managers held an average 4.9% in cash, the research showed, down slightly from 5% in June’s survey. A quarter of those holding higher cash levels said they were doing so because of “bearish views on markets”.

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