Moreover, it said, investors are the most underweight on BRIC countries - Brazil, Russia, India and China - in the history of our data.
About 43 per cent of respondents are of the opinion that global emerging market (GEM) equities are "undervalued" and this in turn could lead to a "contrarian rally", according to the global financial services major.
"Indeed, global emerging market equity allocations are now the lowest on record, but with net 43 per cent saying emerging market equities are undervalued, a contrarian rally may be approaching," the BofA-ML report said today.
Around five years ago emerging markets were "safe" and banks were "toxic". In a complete reversal, emerging market is now seen as the biggest risk to financial market stability.
Emerging market investors are close to record underweights in Russia, Mexico, Thailand, Turkey, South Africa, Brazil, and Colombia.
"Growing fears of a hard landing for China's economy have further marginalised emerging market equities," the survey noted, adding: "One glimmer of hope for GEM is that the number of investors seeking to underweight the region in the coming year has eased slightly."
A net 24 per cent of global investors would like to underweight GEM in the next 12 months, down from a net 28 per cent in January.
Meanwhile, investors have sent a clear signal that sentiment toward developed world equities remains strong, the survey added.
Overall, 222 panelists with USD 591 billion of assets under management participated in the survey from February 7 to 13 this year.
The survey was conducted by BofA Merrill Lynch Research with the help of market research company TNS.