Global Investing Hot Spots

Want gains? Look overseas: BlackRock's Russ Koesterich

Global bright spots for your money

Investors seeking gains amid a volatile market should look outside of the U.S., BlackRock's Russ Koesterich said Wednesday.

"Looking for opportunities to add to positions in international developed markets is one of the strategies we'd be looking to deploy," the firm's global chief investment strategist said in a CNBC "Squawk on the Street" interview.

U.S. markets have been roiled recently, with all three major U.S. indexes shedding more than 7 percent this quarter. Still, Japan's Nikkei 225 index and the German DAX have dropped about 14 percent and roughly 12 percent in the same period, respectively, amid growth concerns in those regions.

The stock movements inside the Shanghai Stock Exchange in the Lujiazui Financial district of Shanghai on September 22, 2015.
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"Yes, the U.S. is growing faster than Europe or Japan, but the reality is that the U.S. market is facing several headwinds that are idiosyncratic," Koesterich said.

"The stronger dollar is a headwind for U.S. companies, we have a virtual [profits] recession among U.S. large caps and you already have U.S. companies with margins close to record highs," he said. "It's going to be very difficult for them to grow their earnings through expansion of profit margins; it will be easier for companies in Europe and Japan to do that over the next year or two."

Koesterich also noted that some emerging markets, namely India, Mexico and some parts of China, could also present some upside to investors.

"Looking at those bright spots and realizing that EM has underperformed for about four to five years, valuations, at least on a price-to-book basis, are at their cheapest compared to developed markets in 12 or 13 years," he said.