Risk appetite has also risen, with the percentage of investors that would be willing to take on higher-than-normal risk at its highest level since April 2011. (Read More: Why BofA Thinks Stocks Will Hit New High in 2013)
Asset allocators favor emerging markets, with a net 38 percent overweighting emerging markets, compared to half that amount in September. At the same time, the number of asset allocators overweighting U.S. equities has fallen to five percent from over 20 percent in the middle of the year.
"They're still overweighting U.S. equities but just less overweight than they had been in most of 2012. It's more like a modest overweighting, and I think that's different because we had found a lot of investors hiding in U.S. equities and dollar-denominated assets broadly," said Kate Moore, BofA Merrill Lynch global equities strategist.
Moore said it appears investors have moved on to making sector bets on the U.S. market, rather than a broad market approach.
The fund managers have also over-weighted European equities relative to U.S. equities for the first time since November 2010. Europe's debt crisis remains the second biggest worry, getting 22 percent to the fiscal cliff's 47 percent. The overweight Europe is just light, with 7 percent preferring European equities. (Read More: Markets Missing One Thing: 'Where is Everybody?')
The leading sectors over-weighted globally are discretionary and real estate, and the materials and energy sectors were most underweighted.
Moore said investors aren't yet putting their money where their optimism is. She said emerging market investors and Asia Pacific investors are saying things are better in China, but they are not investing in resources stocks and the sector is at its lowest net allocation in four years.
"They're saying we feel good about the Chinese growth story, but they're not betting on materials stocks and energy," she said.
For that reason, she sees materials as a promising area for investors in 2013.
