With the market and economy turbulent, fund managers are steering away from equities and toward the safe haven of cash.

Global investors hold an average of 5.2% of their portfolios in cash, according to the BofA Merrill Lynch Survey of Fund Managers for August. That’s up from 4.1% in July and close to the high of 5.5% reached in December 2008. What’s more, a net 30% are overweight cash compared with their benchmark, the highest level since March 2009.

The news concerns some financial planners. Larry Elkin, president of Palisades Hudson Financial Group, in Scarsdale, N.Y., said he expects the funds his clients are invested in to have all their money at work, except for cash needed to accommodate redemptions.

“When we invest in an equity fund, we want that equity fund to be invested in equities,” he said. “We manage our clients’ cash levels based on what that client requires.”

Meanwhile, the survey showed that asset allocators are briskly scaling back equity positions: A net 2% are overweight equities, down from a net 35% in July. Asset allocators have also reduced their underweight positions in bonds and reduced holdings in commodities and alternative investments.

"Investors are waiting for convincing, coordinated action from governments before recommitting their cash to equities," Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research, said in a press release.

BofA Merrill Lynch's survey of 244 fund managers took place from Aug. 5 to Aug. 11, when worldwide equities fell by 12.3%. Of course, there are plenty of advisors who believe that heading for cash in turbulent times just means you haven’t allocated your assets properly.

“You can’t time the market,” said Ryon Beyer, director of employer sponsored retirement plans at McLean Asset Management Corp., in McLean, Va. “When you invest, you’re investing in capitalism, and we’re bullish on capitalism.”

Because market volatility is a given, investors must give themselves an adequate time horizon, adds Alejandro Murguia, a principal at McLean. “If you become an event-driven investor, you’re going to be lacking the foundation that helps guide you toward your objectives.”

In other findings from the August survey:

-- Investors believe the global economy will slow significantly in the coming 12 months but will avoid dipping back into recession. A net 13% of respondents to the global survey opined that the world economy is headed for a period of weaker growth. Sentiment has swung since July, when a net 19% expressed confidence the economy would improve.

-- 14% of U.S. fund managers believe the U.S. economy will weaken, in contrast to the net 29% predicting a stronger economy in June.

-- 30% of respondents expect the corporate profit outlook to deteriorate in the coming 12 months. In July, 11% forecast an improvement in profits. Yet 42% of investors continue to hold the view that a global recession is unlikely in the coming year.

-- Asset allocators have reduced their U.S. positions aggressively. Asset allocators responding to the global survey moved slightly underweight U.S. equities. A net 1% of the respondents are underweight in August, compared with a net 23% overweight in July.

-- The Eurozone has avoided the global equities sell-off: The panel of respondents remains underweight Eurozone equities, but the net percentage underweight the region has fallen to 15% in August from 21% in July.

-- Asset allocators have reduced their overweight position in global emerging market equities. A net 27% of the global panel is overweight the region, a month-to-month decrease of eight percentage points.

 Are you comfortable with fund managers inching into cash, or does that make it more difficult to meet your clients' objectives?