Investors are taking on too little risk in the stock market as they overthink why it remains calmer than normal, according to BlackRock, the world’s largest asset manager with $5.4 trillion in assets under management as of March 31, 2017.

This caution is being reflected in measure of investor fear, such as the CBOE’s Volatility Index for the S&P 500, which sits below its historical averages, suggesting to some that the market is too complacent. The VIX on Wednesday was near 10.35, lower than its long-term average of 18.82.

Additionally, most traditional measures of valuation are at or above their historical averages, including the Shiller price-to-earnings ratio, implying, at the very least, investors could expect lower returns going forward.

But on these two counts, there’s less cause for concern than some of the critics of this rally, which seems to be dodging everything thrown at it.

Volatility is likely to stay low for some time, said Richard Turnill, the global chief investment strategist for BlackRock, at a media briefing on Tuesday. Investors became more cautious about investing in risk assets since the financial crisis, Turnill said, and this was worsened by the period of low volatility.

"One of the consequences of that is potentially many investors are still not taking enough risk, and particularly enough equity risk in their portfolios, in order to meet their long-term financial gains."

The market's calm is not unusual, Turnill said, and historically persisted for a long time until it was interrupted by a brief crises. Screen Shot 2017 07 12 at 12.11.38 PM

Foto: sourceBlackRock

Importantly, today's low volatility environment is associated with a stable economy as is normally the case, Turnill said.

Two things could change that: an economic recession, which he considered a low risk, and a significant build up in financial risk, which doesn't look systemic enough to cause widespread damage.

"Many investors, we think, are overly concerned about a change in the volatility regime," Turnill said. If volatility increases, the losses could not only hit stocks that have driven the rally, but wagers on volatility to remain low.

"We'd view any short-term rises of volatility, as we've seen many of over the last couple of years, as opportunities to buy the dips," Turnill said. "We don't today see the characteristics or the pieces in place which would drive us out of this regime into a higher volatility regime."

"The timing to the next recession globally could potentially be measured in years rather than quarters."