Investors haven't hoarded cash like this in 15 years

There’s a lot to be nervous about in the investing world right now.

Brexit. China’s economy slowing. The US presidential election. Record-low bond yields. Stocks looking wobbly at record highs.

And in response to all of this uncertainty, investors have ramped up their holdings of good old fashioned cash.

According to Bank of America Merrill Lynch’s latest fund manager survey, investors surveyed by the firm now have 5.7% of their net holdings in cash, the highest percentage since November 2001.

Recall that in November 2001 the US was mired in recession while dealing with the fallout of both the tech-bubble bursting and the September 11 terrorist attacks.

Right now the concern isn’t so much a reaction to traumatising events like these but an anxious anticipation that something bad will happen.

Elsewhere in the survey, BAML found that the strategy investors thought was most over-extended was being long “quality” stocks — these are basically stocks that have durable cash flows and strong competitive positions, among other characteristics. Being long quality stocks is another expression of investors being nervous.

The chart from BAML compares how much investors have allocated to different asset classes compared to a historical average.

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