Investors are running back to cash as they worry about a strong bout of volatility ahead, according to the latest Bank of America Merrill Lynch fund manager survey.
Cash levels have jumped back to 5.8 percent in October, levels not seen since just after the Brexit vote in June, and, before that, in the fall of 2001 just after the Sept. 11 terror attacks, the closely watched survey showed.
The managers most fear the disintegration of the European Union, with 20 percent citing that as the biggest "tail risk," or unlikely occurrence that would have substantial repercussions. The second is a new addition — worries that the bond market will crash, cited by 18 percent.
Finally, the third fear is that Republican Donald Trump will win the presidency. Most polls show the New York billionaire trailing Democrat Hillary Clinton, but there are still three weeks to the election.
For fund managers, the Trump trade is clear: long volatility, short the Mexican peso and short bonds, with volatility by far considered the best bet with 51 percent of respondents.
While portfolio managers say they fear tail events and are moving to cash, the allocation to equities hit a seven-month high while bond allocation fell to a 10-month low.
Wall Street has been leery over Trump winning, primarily based on his unpredictability. A recent analysis from Macroeconomic Advisers suggested that should polls start to swing in Trump's favor, the likely result would be a 7 percent decline into Election Day.
However, others aren't so sure. Trump, after all, is proposing massive tax cuts and infrastructure spending that at least in the near term could get capital moving again.
"The expected pick-up in activity and inflation coupled with significant corporate tax rate cuts and the focused fiscal easing proposed by House Republicans is likely to provide a boost," AXA Investment Managers said in an analysis.
AXA thinks changing parties in the White House could rattle the markets in the short term — the has gained 63 percent during President Barack Obama's time in office — but that would pass.
"According to our estimates, the sectors that would benefit from a Trump presidency represent the majority of the MSCI U.S. Index, while those benefiting from Clinton are marginal," the firm said. "Illustratively this suggests a Trump presidency would be relatively positive for the markets beyond any initial reaction."
Indeed, Goldman Sachs warned that should the Democrats post a resounding victory and take control of not only the presidency but also Congress, that "wave election" would be negative for the market.