Mary Callahan Erdoes, CEO of JPMorgan Asset Management, is concerned about retail investors continuing to invest in bonds despite the growing risks.
"People who aren't as informed are going into the bond market....they don't understand the effects of duration and convexity and what will happen eventually. That's the most dangerous part of this," Erdoes said at the Delivering Alpha conference presented by CNBC and Institutional Investor Wednesday. "It gives me great pause. "
Erdoes said that the mass of money coming into JPMorgan's asset management unit was in fixed income. The positive, she said, is that much of the inflows are into unconstrained bond funds, meaning ones that can attempt to avoid losses from rising interest rates in various types of fixed income securities.
Generally, Erdoes said that the American economy wasn't in trouble.
"The U.S. economy is on great footing," she said, noting increased credit card debt and low delinquencies as examples. "The economy looks strong."
When asked if we were in a credit bubble today, Erdoes said no. "It's not a bubble if we grow into it, it's a bubble if it stops right now," she said.
Erdoes' asset management unit has more than $2.3 trillion in client assets. In addition to being a member of J.P.Morgan's operating committee, Erdoes leads the firm's strategic partnership with hedge funds Highbridge Capital Management and Gávea Investimentos.
She did not respond to a question about being a potential successor to overall bank CEO Jamie Dimon, who has throat cancer.
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