JP Morgan asset chief Erdoes says investors have grown too comfortable with risk, growth stocks

  • J.P. Morgan's Mary Callahan Erdoes warns investors could be unprepared for a downturn.
  • "I would take a summer look at your portfolio and make sure you are not over your skis when you didn’t realize it," she advised at the Delivering Alpha conference.
  • State Street Global Advisors CEO Cyrus Taraporevala echos Erdoes, adding that he is urging clients to "weatherproof" their allocation.
Mary Callahan Erdoes speaking at th 2018 Delivering Alpha Conference in New York on July 18th, 2018. 
David A. Grogan | CNBC
Mary Callahan Erdoes speaking at th 2018 Delivering Alpha Conference in New York on July 18th, 2018. 

J.P. Morgan Asset Management chief executive Mary Callahan Erdoes warned that investors may be growing too complacent in managing a high-growth portfolio and could be unprepared for a downturn.

"Every moment since the financial crisis of 2008, our job as financial advisors is to help clients re-risk when it was uncomfortable to do so," Erdoes said at the Delivering Alpha Conference in New York on Wednesday. "Well they’ve done it, and now they’re very comfortable doing it, and they see no risks on the horizon. So now they’re even more comfortable, and no one is reassessing their portfolio and saying: 'Hang on! That growth portfolio that I had a small allocation to is now a very big allocation, because it’s up 17 percent year to date.'"

"I would take a summer look at your portfolio and make sure you are not over your skis when you didn’t realize it," she added.

High-growth technology stocks have outperformed the broader stock market over the past year and became one of the most popular trades on Wall Street. Mega-cap names like Facebook and Amazon, which both hit all-time highs Wednesday, carried both the S&P 500 and the Nasdaq Composite to record levels over the past year.

While the S&P 500 remains more than 2 percent off its high, clinched in January, the Nasdaq Composite reached a new all-time high on Tuesday.

The Russell 2000 — which is made up of small-cap stocks — is up about 9.6 percent year to date through Tuesday's close, while the large-cap S&P 500 index is up just 5.1 percent in that time.

As manager of one of the largest asset and wealth units in the world, Erdoes oversees $1.7 trillion in assets under management, according to J.P. Morgan's website. She joined J.P. Morgan Investment Management as the head of fixed income for high-net-worth clients, foundations and endowment in 1996 before assuming her current post in September 2009.

Erdoes was joined in discussion by State Street Global Advisors CEO Cyrus Taraporevala, who also said he is urging clients to shore up their risk.

"We are preparing and weatherproofing the portfolio. Think about how your portfolio would perform in a more turbulent time," he advised. "This is not the time to be greedy. Can you handle the volatility? A little dry powder will not hurt you."

Taraporevala oversees the global investment management arm of State Street Corporation. Prior to joining State Street Global Advisors in 2016, Taraporevala led Fidelity Investments' retail managed accounts and life insurance and annuities businesses.

State Street Global Advisors, best known for its lineup of low-cost exchange-traded funds, presided over $2.73 trillion in assets under management as of March 31, 2018.

Previous Years

  • CNBC and Institutional Investor hosted the 7th Annual Delivering Alpha Conference on September 12, 2017.

  • Delivering Alpha 2017 stage, signage

    Meet the 2017 advisory board of Delivering Alpha, which takes place on September 12, 2017 at The Pierre in New York City.

  • The stage at Delivering Alpha 2016 in New York on Sept. 13, 2016.

    CNBC and Institutional Investor hosted the 6th Annual Delivering Alpha Conference on September 13, 2016.

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CNBC and Institutional Investor are pleased to host the 8th Annual Delivering Alpha Conference in New York City on July 18, 2018. Please take note of the new month for 2018. Delivering Alpha continues to be an incomparable who’s who of the investor community with leading asset manager and institutional investors offering candid views along with illustrious political and economic commentators appearing in short segments moderated by CNBC talent and II editors.

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