Investors are positioning themselves for slower growth in China and prolonged low inflation, which has sent commodities allocations to a four-year low. Europe is starting to come back, with investors becoming optimistic about the investment opportunities there.

According to the BofA Merrill Lynch Fund Manager Survey for May, a net 8 percent of fund managers in Japan, Asia-Pacific Rim and Global Emerging Markets expect China's economy to weaken over the next 12 months, compared with a net 9 percent saying it would strengthen a month ago.

Fund Managers are saying that they see little threat of inflation, and the proportion of investors expecting short-term interest rates to rise has fallen to a net 14 percent from a net 32 percent in April.