Investors are still bearish but no longer "apocalyptically" so, according to Bank of America's (BofA) monthly survey of global fund managers in August, as hopes rise inflation and interest rates shocks will end in the coming quarters.

BofA, which polled investors overseeing $836 billion in assets between Aug. 5-11, said on Tuesday they had cut back a net underweight position in equities to minus 26%. That was an improvement on the low of minus 44% in July, a level last seen in the 2008 global financial crisis.

But fears of economic slowdown continued to rise, with 58% of investors anticipating a global economic recession in the next 12 months, up from 47% last month and the highest since May 2020.

The share of uninvested cash in portfolios dropped to 5.7% from 6.1% in July, but remained "very high", BofA said.

Stocks have rallied in the past two months after a brutal first half of 2022, and BofA said August saw a big rotation into U.S stocks, technology and consumer shares, while investors sold out of defensive stocks such as utilities and consumer staples, as well as UK equities.

U.S. shares are up about 12% in the last month, but remain about 10% down year-to-date.

Recent U.S. inflation data has been better-than-expected, leading to expectations the Federal Reserve will not hike interest rates as aggressively as investors previously anticipated.

Despite the uptick in investor sentiment, Bofa said the survey indicated its Bull/Bear indicator remained at "max bearish".