Last year’s strong stock performance will not last, according to some of the largest US institutional investors.

The response of central banks around the world to the coronavirus pandemic has boosted stock returns, Mary Erdoes, director of wealth and asset management at JPMorgan Chase, said at CNBC’s Delivering Alpha conference on Wednesday.

“Since Delivering Alpha last year, markets have risen 30% to 50%, clearly not normal,” Erdoes said. “We’re enjoying it, but this is not a normal period.”

Future stock returns are likely to be “much more subdued” while volatility will remain the same, according to Jason Klein, chief investment officer at Memorial Sloan Kettering Cancer Center.

The CIO said expectations for an average annualized return of 10% should be closer to 5%.

“What used to be a tailwind is now a headwind,” said Klein. In his opinion, stock valuations are “market-wide” and could be vulnerable as the Federal Reserve withdraws the exceptional support it has given markets since 2020.

Where’s Alpha Now: Mary Callahan Erdoes, JP Morgan Asset & Wealth Management CEO Ashbel Williams, Florida State Board of Administration Executive Director and CIO Jason Klein, Memorial Sloan Kettering Cancer Center SVP & CIO Moderator: Becky Quick, CNBC “Squawk Box” Co -Anchor

CNBC

In response to bonds that offer negative real returns, large investors are looking for alternative investments that offer yield and are not correlated to stocks, according to Ashbel Williams, executive director and CIO of the Florida State Board of Administration. He manages over $ 195 billion in assets for one of the largest US pension funds.

It invests in assets like planes, trains, wood, and music and television rights, he said. Bonds now make up a smaller percentage of his holdings, down 18% or 19% from about 25% a decade ago, Williams said.

Another area that could deserve more investor attention is China, where stocks plummeted following regulatory crackdowns. Certain Chinese companies can be very attractive investments, Erdoes said.

“China has gone on sale,” she said. “Customers are underweight in emerging markets and very underweight in China in particular.”

There is also a “ton of opportunities” in Europe, mentioning their banks that are still trading below their book value, she said.

“They want to look for other regions of the world that can potentially catch up,” Erdoes said.

Both Williams and Klein insisted that now is a good time to team up with active world-class executives.

“If you own entire markets and you think asset selection doesn’t matter, it’s great when the markets go up,” said Williams. “But when things get really tough and circumstances affect different industries and companies in different ways … then active management makes sense.”

The S&P 500 is up 31% over the past 12 months.

“The foam went on,” said Erdoes. “Only time will tell how long it will take.”