Investors want the companies they are invested in to be a little more conservative.

A Bank of America Merrill Lynch note out Tuesday said that according to its global equity fund manager survey, equity investors are now asking companies to strengthen their balance sheets after “recent record volumes of re-leveraging transactions.”

The development follows a period where record-low interest rates have enabled companies to lever up to embark on mergers and acquisitions activity and huge buybacks.

The note said:

Our view is that a lot of this activity was front loaded – which was especially the case this year where companies pushed forward to beat the Fed’s rate hiking cycle. Because equity investors – that tend to get what they ask for – increasingly are saying enough is enough, and a lot of releveraging activity was front loaded, and with an expected more benign rate hiking cycle there is less urgency to pull the trigger on deals, we continue to think that corporate balance sheets (ex-energy, ex-materials) will improve in 4Q and into 2016.

The analysts highlight the share price reaction to recent company acquisitions and share buybacks as evidence of the changing mood.

Acquiring companies had for an extended period seen a share price pop in reaction to them announcing a deal. Now that has stopped, and share are performing in line with the market. Companies that buy back a lot of their own stock have also underperformed in recent months, according to the note.

The Bank of America Merrill Lynch fund manager survey meanwhile found that the percentage of respondents who said corporates could and should take on more leverage is falling.

The percentage of respondents who said companies should repair their balance sheets is now on a par with the percentage that said companies should return to cash to shareholders.

Global corporate balance sheets

Bank of America Merrill Lynch

What would you most like to see companies do with cash flow?

Bank of America Merrill Lynch

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