BlackRock CEO Larry Fink BlackRock CEO Larry Fink

BlackRock CEO Larry Fink thinks the markets may be at a risk for a melt-up.

“I think we have a risk of a melt-up — not a meltdown here,” Fink told CNBC’s “Squawk Box.” “Despite where the markets are in equities, we have not seen money being put to work. We have records amounts of money in cash. We still see outflows in retail in equities, we still see outflows in institutions.”

A melt up, as defined by Investopedia, is an unexpected improvement in the investment performance of an asset class, driven partly by a stampede of investors who don’t want to miss out on its rise.

According to Fink, right now investors may be at risk of under-investment in equities, which could lead stocks to rally even more in 2019 as more money jumps back into the markets.

“The marketplace — with the market rally as large as it is — I would clearly tell you at this moment most investors are exposed by being under-invested at this time,” Fink said.

The iShares MSCI ACWI exchange-traded fund, which tracks global stocks, is up more than 15% this year, and the S&P 500 has rallied nearly 16%, according to CNBC.

Given the headwinds of 2018, Fink overall views 2019 as a better situation.

“Last year global equities were down 13%,” he told CNBC. ”Global equities came back about 11% throughout the quarter. So absolutely the circumstances are quite different. We grew our total asset base by 9%, so we grew over $525 billion in assets — $65 billion was organic [and] the rest of it was market movement.”

BlackRock also saw $80 billion of inflows in fixed income. Fink largely attributes these inflows to the Federal Reserve reducing its rate projections to reflect no hikes in 2019.

“We’re seeing huge excitement in fixed income,” Fink told CNBC. “Many people thought we were going to be in a period of rising rates. We were not, and we saw huge under-investment and people had to rush in to invest in fixed income.”

Fink has not seen that in equities — yet.

“You saw many people putting money to work in fixed income, but global equities you saw as an industry huge outflows,” he said.

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