Global investors have gotten a bit more upbeat about stocks and are less fearful about the state of the global economy, even as they have become more wary of geopolitical risks, according to Bank of America Merrill Lynch’s monthly global fund managers’ survey.

As a result, they’ve been buying technology stocks and now favor the group over defensive pharmaceuticals, their top sector in December. The percentage of investors in the survey overweighting technology rose to 39 percent from 31 percent last month.

U.S. fund managers are also dipping into bank stocks, while Europeans continue to avoid them. U.S. fund managers underweight banks fell to just 16 percent from 32 percent in December.

As investors are showing more willingness to take risk, they also see geopolitical concerns escalating. A net 69 percent see global risks as “above normal,” up from 48 percent last month. BofA Merrill Lynch says that reading typically coincides with a rise in oil prices. Nymex crude has risen 1.7 percent so far this month, as Iran faces new economic sanctions.

The January survey also showed that fund managers are less worried about a corporate earnings decline than they were a month ago, with just 21 percent seeing a deterioration of profits worldwide in 2012, down from 41 percent in December.

Those expecting corporate earnings growth of less than 10 percent has fallen to 42 percent from 60 percent, and investors increasingly say that corporations need to invest more. A net 55 percent said companies are underinvesting, the highest reading in 10 months.

Fifty-six percent believe the profit outlook is better in the U.S. than elsewhere in the world, up from 50 percent in December. As for Europe, 70 percent say it has the least favorable profit outlook.

BofA Merrill Lynch found that only a net 3 percent of the investors now believe the world economy will weaken in the next 12 months, down from a net 27 percent in December, for the biggest one month turnaround in that reading since May, 2009.

Asset allocators increased their exposure to the U.S. stock market, with a net 28 percent now overweight, up from a net 23 percent last month. BofA Merrill says its composite risk and liquidity indicator is at the highest level since July 2011, before the sovereign debt crisis became a major focus.

Cash levels also moved to their lowest level since July, now on average at 4.4 percent from 4.9 percent in December. The number of investors taking lower than normal levels of risk fell to 33 percent from 42 percent in December.

Hedge funds have also reduced their leverage to the lowest level since August in this months survey. The average ratio of gross asset to capital fell to 1.22 from 1.41 in December.

The firm conducted the survey from Jan. 6 to 12, and a total 286 investors participated in global and regional surveys.

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