Commodities have fallen even further out of favour with fund managers, most of whom believe the world has fallen into recession, a Merrill Lynch survey has found.

The proportion of investors overweight in commodities has dropped to 6%, compared with 15% in August, Merrill's monthly survey of fund managers has shown. Meanwhile, the proportion of investors underweight has increased to 30% from 12% over the same period.

"There are signs that [investors] are stepping back from alternative asset classes, particularly commodities," Merrill said, adding that the survey was "one of the most pessimistic" it had conducted.

"Over the past month, fund managers have lost faith in global growth, commodities, China's economy and emerging markets."

Fund managers, more than two-thirds of which believe the world is in recession, have hoarded cash and ditched their traditional reluctance to go overweight in bonds, despite the survey's strongest reading in more than a decade that equities had been oversold.

Perceptions over the value of basic resources stocks swung particularly over the month, with a majority of European fund managers considering the sector undervalued.

However, they ended their brief fling with food and beverages stocks, with the balance of fund managers underweight falling from 2% to 18% over the month.