Recent spikes in oil prices have investors fearing for corporate profitability and global growth, according to the Bank of America Merrill Lynch Survey of Fund Managers for March.

The monthly global survey, conducted between March 4 and 10, included responses from more than 200 fund managers handling $602 billion in assets, while the regional surveys included more than 160 managers with a total of $395 billion under management.

Twenty-four percent of respondents expect corporate operating margins to fall over the next 12 months, a sharp increase from the 2% who felt that way in February. Still, a net 32% still expected corporations to increase profits in the next year, though that was down from 51% who felt that way last month.

Respondents' macroeconomic outlook also declined in March, with a net 31% believing the global economy will strengthen in the next 12 months, down from 51% in February.

The most common possible outlook amongst respondents is stagflation, with 38% expecting below-trend growth and above-trend inflation in the next 12 months.

"The shift in the March survey is toward stagflation, with lower growth expectations and higher inflation and interest rate expectations causing cash levels to rise," said Michael Hartnett, chief Global Equity strategist at BofA Merrill Lynch Global Research.

But while most investors don't expect U.S. interest rates to rise sooner as a result of spiking oil prices, three-quarters expect a rate hike within the next year. Thirty-five percent expect the yield curve to flatten over the period, up from 14% in February.

"If the oil price reverses, this change in sentiment could prove quite fleeting. There has been no massive sell-off. Investors are in 'wait-and-see' mode," said Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research.

Responding to the uncertain outlook in the economy, investors have increased their cash holdings, with 18% overweight cash in March, compared to 3% last month. Fund manager exposure to equities and commodities decreased, and interest in bonds remained flat.

Confidence in China improved somewhat, with 15% expecting the Chinese economy to weaken in the next 12 months, down from 27% in February.