Go abroad for gains: BlackRock strategist

Europe and emerging markets hold opportunities, BlackRock's Russ Koesterich said Friday.

"The U.S. has had a very strong run year to date, and even after the sell-off, we're still up 15 percent for the year," he said. "And as a result of that, the valuations in the United States, while still reasonable and cheap compared to bonds, are a bit stretched compared to other parts of the world.

"In particular Europe and emerging markets are looking very inexpensive, and there are some headwinds there, but I think many of those are already reflected in the price."

On CNBC's "Fast Money," Koesterich acknowledged that headline risk loomed in September, probably making the equity market vulnerable, but added that .

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"Even though Europe big run, again, it's important to put into context of how much the U.S. has outperformed over the last year, how low European valuations are still relative to the U.S.," he said.

"So, if I look out next one to two years, again, I see the risks in Europe, but I also think you're also being paid to take some of those risks, given the big risks to U.S. stocks right now."

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Koesterich called European banks the "Achillies' heel" of that market for their failure to adequately re-capitalize as U.S. financial institutions have. He also urged selectiveness in stock picking.

"I would much rather own German industrial companies, companies that are basically levered to non-European growth, than I would own European banks," he said.

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"So, I think that's one very effective idea on how to play Europe without taking on some of that risk."

By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.

— CNBC's Torrey Kleinman contributed research to this report.

Trader disclosure: On Aug. 15, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Steve Grasso is long BA; Steve Grasso is long BAC; Steve Grasso is long BBRY; Steve Grasso is long GDX; Steve Grasso is long GOOG; Steve Grasso is long HERO; Steve Grasso is long HPQ; Steve Grasso is long MHY; Steve Grasso is long LNG; Steve Grasso is long MJNA; Steve Grasso is long NVIV; Steve Grasso is long PFE; Steve Grasso is long QCOM; Steve Grasso is long S; Steve Grasso is long ASTM; Steve Grasso is long POT; Steve Grasso is long DECK; Steve Grasso is long DHI; Dan Nathan is long FB; Dan Nathan is short BBRY; Dan Nathan is long VIX; Dan Nathan is short IWM; Brian Kelly is long US dollar; Brian Kelly is short Yen Bonds; Josh Brown is long TLT; Josh Brown is long AAPL; Josh Brown is long XLU; Josh Brown is long XLF; Josh Brown is long FSLR.