In January, when investors feared a China-slowdown-led markets meltdown, RBS credit chief Andrew Roberts fired off a note to investors warning of a "cataclysmic year" in markets, urging investors to liquidate their portfolios.

It came ahead of sharemarkets, including the S&P/ASX 200, falling into bear territory in February.

Seven months after the bearish call, global markets are sitting at the year's highs, including London's FTSE which weathered a near 9 per cent plunge following the shock Brexit result, and the local sharemarket, which has all but shaken off its bear market, while the three bourses that make up Wall Street sit at record highs.

Among Mr Roberts' most bearish predictions, amid market stress signals that he said mirrored the conditions ahead of the Lehman Brothers collapse in 2008, Mr Roberts tipped sharemarkets to fall by a fifth, and the price of oil falling to $US16 ($21) a barrel. Brent crude oil prices are currently buying just below $US50 a barrel.

Those stress signals included contracting global trade and loans, while debt ratios had hit record highs. While these concerns haven't abated, fund managers are doing anything but selling when it comes to equities. 

'Best house on bad street'

"Equities are the best house on a bad street. Until we see a black swan event the sharemarket looks like it's going higher," Ophir Asset Management portfolio manager Andrew Mitchell said.

"I am sure there are some bearish equity managers who have been sitting on a lot of cash who are capitulating now."

It's a marked contrast from a year ago, when fund managers were stockpiling low-returning cash after the market fell from its perch of almost 6000 points in April.

"I don't think people have walked away from their views of wanting to have that dry powder," Bennelong Australian Equity Partners investment director Julian Beaumont said.

Mr Beaumont, whose fund typically sits on 1 per cent cash or less, said the macroeconomic conditions remained a concern but investing in stocks had delivered superior returns having come through the sell-offs around Brexit, China, and interest rate rises in the US.

To the extent the market has moved higher, sparking concerns around the valuation, Mr Beaumont said taken in context, the market's value looked "reasonably fair".

"A lot of investors are used to the old days of lower multiples and higher yields, but they need to take into account the current market and give those current valuations some context," he said, particularly with other assets offering very little in the way of yield. 

'Least loved rally of all time'

Katana Asset Management is one fund that has remained cautious. Until recently the fund had been sitting on 50 per cent cash, and portfolio manager Romano Sala Tenna said they had reluctantly drawn down around 10 per cent to join the rally.

"This is the least loved rally of all time," he said, labelling the conditions "dangerous".

"What we're seeing now is equities are really the least ugly asset class remaining. You've had the property rally, you can't go into bonds and variable interest rates give you nothing," he said.

The foundation for Mr Roberts' bearish call was that the Dow Jones had endured the worst start to the year on record, and was down 12 per cent by the time the RBS note appeared, Mr Sala Tenna said.

Rather than a recovery fuelled by improving economic conditions and a lift in company earnings, the market's rally to date was being propelled purely by sentiment, he said.

"While things don't get any worse, you get buying into the rally, but because it is a rally focused on sentiment and no other choice, you won't have the same conviction," he said.

Investors globally remain cautious. According to Bank of America Merrill Lynch fund manager survey for August found cash levels dropped sharply from their 15-year high of 5.8 per cent to 5.4 per cent, but it still historically high.

Investors are less bearish, the survey found, but the bank's sentiment gauge is yet to swing from "fear" to "greed".

Optimism rises

Expectations for global growth have improved dramatically since the last survey, which came in the weeks following the Brexit. Twenty-three per cent of investors now expect improvement in the global economy in the next 12 months.

While the "sell everything" call may have raised eyebrows, more than a few of RBS' predictions have come true.

The Organisation of Petroleum Exporting Countries has yet to agree to a limit to supply. Yields on 10-year German bunds surpassed RBS' prediction of falling to 0.16 per cent, instead falling into negative territory, as low as -0.2 per cent.

Mr Sala Tenna says amid the lack of conviction and macro storm clouds, their view on equities remains cautious, and any sign of trouble will spark a move back into cash.

"When we hit that air pocket, we for one will be running for the door quicker than normal," he said.