Even as stocks continue their mostly uninterrupted path to higher ground, fund managers are holding relatively big amounts of cash while worrying about China and a commodities crash.
The latest survey from Bank of America Merrill Lynch shows that the biggest fear is a hard landing for China's slowing economy, and the effect it would have on the global commodity trade.
Commodity allocations have fallen to a four-year low while cash allocations held steady at 4.3 percent, a surprise considering how much equities have rallied.
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The Standard & Poor's 500 has gained nearly 5 percent in the second quarter and about 15.5 percent for 2013.
Yet equity allocations actually fell, from a net 47 percent overweight position to 41 percent. Allocations have come off dramatically in just the past two months, with a net 57 percent of managers holding overweight stock positions as recently as March.
Also, fears of a China slowdown caused managers to turn negative on the country by a net 8 percent, with respondents citing a slowdown there as their second-greatest fear. The European debt crisis remains the biggest concern.
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Emerging markets in general fell out of favor, with overweight positions plunging to a net 3 percent from 34 percent in March.
"May's Fund Manager Survey demonstrates a clear exit from China and assets connected to China—in the shape of commodities and emerging market equities. But it's worth noting that investors are keeping faith in global growth," said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
A surge in Japan has attracted notice, with allocations to the stock market at their highest level in seven years. The Nikkei 225 index is up 46 percent in 2013.
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But with global growth uneven, commodities have been struggling despite the Federal Reserve's efforts to promote growth in part through currency devaluation.
So-called quantitative easing programs have caused a massive surge in stocks but have been less effective lately at boosting commodity prices.
"Industrial commodities are more sensitive to near-term economic prospects (which remain poor), equities are a closer substitute for bonds in investor portfolios, and the demand and supply responses to rising commodity prices limit their upside," Julian Jessop, head of commodities research at Capital Economics, said in a note to clients.
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Easing efforts have failed to generate much of a spark in the economy, lessening demand for metals in particular, he added.
"The divergence between commodity and stock markets is more likely to be closed by falls in equity prices, as valuations become too stretched and risk appetite wanes again," Jessop said.