Funds are cutting allocations to Europe and Japan equities as fears grow that central banks' easing efforts will fail, Bank of America-Merrill Lynch's fund manager survey for April showed.
The survey found that managers consider "quantitative failure" the biggest tail risk -- a concern that appeared to be particularly represented in a pull back from Japan equities.
A net 3 percent of fund managers are underweight in their allocations to Japan stocks in April. That's not just a tumble from a net 15 percent overweight in March: It's the first net underweight position in the market since December 2012, when Prime Minister Shinzo Abe returned to office on a platform promising reforms to kick start the country's moribund economy.
Since then, the Bank of Japan (BOJ) has launched multiple rounds of massive quantitative easing which haven't always delivered an encouraging boost to economic growth. In late January, the central bank turned to a negative interest rate policy, but markets haven't behaved as expected, with the yen strengthening rather than weakening and stocks pulling back.