A full 20% expected inflation to move even higher.
In contrast, the previous survey in June showed about 70% of managers expected inflation over 12 months to exceed 2%.
Inflation is running at multi-decade highs in the United States, with recent data showing the consumer price index at 6.2% in the year to October, the biggest annual gain since 1990.
Reflecting investors' view that price pressures will stay elevated for a while, around 80% of those surveyed by Russell said they did not expect inflation to fall below 2% in the next five years.
Against this backdrop and in line with the recent repricing in money markets, fixed income managers also bought forward expectations for a first Fed rate increase.
While Russell's previous survey had shown that 80% of respondents expected no move before 2023, half of investors in the Q4 survey reckon the Fed will move in the second half of 2022.
Just over 40% of respondents expect 10-year Treasury yields to trade between 1.61% and 2% over the next 12 months, while 42% expected yields to rise above 2%.
Yields currently are around 1.63%.
"A key theme is that managers think inflation will be above the Fed's target," said Gerard Fitzpatrick, global head of fixed income at Russell Investments. "But an important point is that managers are not looking at super high inflation".
Expensive valuations and China's property sector were other concerns highlighted by bond investors, Fitzpatrick also said.
Fund managers' expectations for Europe were far more subdued -- 75% of respondents did not expect the European Central Bank to taper its asset purchases before 2023.
The ECB, which faces subdued inflation over the longer-term, has pushed back against market expectations for rate hikes as early as next year. Economists reckon it is unlikely to raise rates for several years.
That outlook has weighed on the euro, pushing it to 16-month lows around $1.1226 .
According to the Russell poll, 63% of respondents expected euro/dollar to trade over the next 12 months below the $1.16 level it trading at when the poll was conducted.
That is substantially lower than their prediction back in June, when around 80% of managers expected the euro to trade in a $1.21-$1.30 range.
On emerging market currencies, fund managers said the Russian rouble, Brazilian real and the Egyptian pound were likely to be the best performers in the next 12 months.
(Reporting by Dhara Ranasinghe; Editing by Sujata Rao and Angus MacSwan) ((Dhara.Ranasinghe@thomsonreuters.com; +442075422684;))