LONDON Investors lifted equity allocations to a 5-month high but cash levels also increased to 5.6%, even as they remained worried about a possible credit crunch and inflation staying elevated, a Bank of America survey showed on Tuesday.

The survey of 289 fund managers with a total of $753 billion in assets showed that commercial real estate was still seen as the most likely source of a credit event, while 71% of the respondents expect a resolution to the debt ceiling before the U.S. runs out of money to pay its obligations.

Investors rotated portfolios into tech stocks, lifting allocations to the highest since December 2021, the euro area and equities, and cut exposure to commodities and utilities.

"Long big tech", "short banks" and "short U.S. dollar" were the most crowded trades in May, while contrarian trades were "long REITs", "long banks", "long value stocks", "short bonds", "short tech" and "short growth", the survey found.

A net 65% of respondents now expect a weaker economy, the most pessimistic in 2023, but most still expect the economy to experience a "soft landing".

(Reporting by Samuel Indyk; editing by Danilo Masoni)