MILAN (Reuters) -Investor sentiment surged in July to its most bullish since February, driven by the biggest jump in profit optimism in five years and a record surge in risk appetite, Bank of America's latest global fund manager survey showed.

Cash levels fell to 3.9% in July, a low that triggered an in-house "sell signal" from the investment bank's strategists.

BofA noted that sentiment was getting "toppy," but added fund managers' overweight positioning in stocks was not yet at extreme levels and bond market volatility remained low.

The U.S. bank suggested investors are more likely to stick to a "summer of hedging and rotation" between sectors rather than placing big short bets or making a significant retreat, as "greed is much harder to reverse than fear."