(June 16, 2010) — According to Bank of America Merrill Lynch’s June Survey of Fund Managers, global fund managers have lost significant confidence in the prospects for economic growth and in the ability of corporations to improve profits. Yet, investors have not given up on riskier assets, finding equities as cheap as they have been since March 2009, with emerging market stocks seen as the most favored sector.

“Investors are starting to see the basis for Europe’s rehabilitation on the back of a more constructive outlook for the euro,” said Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research, in a statement. “Risk appetite has stabilized…You haven’t really seen any panic from investors,” he said.

The survey revealed only 24% of respondents believe the world economy would strengthen in the next year, down from 42% in May and 61% in April. Global investors have expressed similar concerns over corporate profits. A total of 28% of the study’s respondents believed profits would improve in the coming 12 months, compared with 47% in May and 67% two months ago. In addition, 42% of the respondents in the June study described liquidity as poor, up 20 percentage points from May.

The June survey also showed global investors are feeling more hopeful about the outlook for Europe’s stocks and for the euro, with 19% of global investors predicting the euro will appreciate over the coming year, up from 7% in May.

“Global growth expectations have ‘double-dipped’ and positioning is more defensive but investors show little sign of panic,” said Michael Hartnett, chief Global Equities strategist at BofA Merrill Lynch Global Research, in a news release.

Meanwhile, the survey showed investors had sold energy stocks in the face of the Gulf of Mexico oil spill, with only 7% retaining an overweight position in the sector in June, down 30 percentage points from May. According to the news release, the drop represented the biggest monthly swing in energy the survey has recorded.

A total of 207 fund managers, managing a total of $606 billion in capital, participated in the global survey from June 4 to June 10, a period when global equities fell by 7.5%. The survey was conducted by BofA Merrill Lynch Research with the help of market research company TNS.