Expert: June gloom ahead as volatility remains low

Pro: Hard to hold gains into summer and fall
Pro: Hard to hold gains into summer and fall

One expert is staying cautious going into the summer, despite the fact that last week was the best one for the and the Dow since March.

Russ Koesterich, head of asset allocation for BlackRock's Global Allocation Fund, told CNBC's "Halftime Report" that this is an environment of fragile growth and low volatility despite significant risk, especially considering China, U.S. and European politics.

The CBOE Volatility Index hit a low of 13.04 on Friday, its lowest level since April 20 when it traded as low as 12.50.

"You've got valuations that are stretched by most historical measures. You've got volatility well below the historical average. While the economic data has been better, we're still stuck in an environment in which sluggish growth is not giving much of a tailwind to earnings," Koesterich said.

"So in that environment, do I think the market is going to rip? Maybe, but I doubt it's going to be in the U.S., particularly if we see the dollar continue to move higher," he said.

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While some strategists may be concerned about a "Brexit," Koesterich sees it as more of a tail risk and adds that polling data from other recent events in Europe haven't been good predictors of voting behavior.

"When you look at some of the recent elections in Europe — I'm thinking about the U.K. election, I'm thinking about some of the referendums in Greece — the polls have not been particularly accurate. Whether or not that's a real risk, I don't know, but you have to factor that in," he said.

As for the Fed, Koesterich said he doesn't "think it's the end of the world if they go in June or July," and that he thinks "a much bigger issue is what's going to happen to quarterly earnings in the back half of 2016."

— CNBC's Bree Kelly and Gina Francolla contributed to this report.