Investors in exchange traded funds (ETFs) are positioning themselves for a double-dip recession by buying defensive stocks.

 The majority of investors believe emerging markets will end the recession ahead of Western economies, according to a survey by iShares. Most (63%) expect inflation to rise next year and a similar proportion (61%) think the recovery will be W-shaped.

Over half of respondents (55%) said they needed to be overweight on defensives instead of cyclical stocks. The survey found fixed income was a popular asset class choice, and corporate bonds were a key area with $3.3 billion of inflows over the past year.

Almost all the respondents (90%) believed corporate bonds were pricing in a recession followed by a recovery rather than a depression.

"After finding out the thoughts of investors, we can see it clearly reflects their selection of ETFs and trends in asset flows," said Nizam Hamid, head of sales strategy for iShares in Europe.

"For example, over the past 12 months, an interesting trend has been the strength of flows into emerging market countries which have totalled €2.2 billion compared to flows of €1.8 billion into developed market countries, in the exchange traded product space," he added.

Investors are facing unprecedented challenges and are using ETFs to help implement their investment strategies, noted Hamid.

The survey attracted over 200 responses from leading ETF investors.