After hiding out in fixed income, investors began to put money back into riskier assets like equities during the third quarter, BlackRock CEO Larry Fink told CNBC's "Closing Bell" on Wednesday.

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"What was particularly important for the quarter is that in past few quarters, we saw money go into fixed income. In the third quarter, we saw USD 20 billion going into equities," the BlackRock CEO said. "It's evidence investors are looking to add risk."

He also said that he's bullish on US banks and that investors should see volatility in Europe as a buying opportunity.

During the quarter, BlackRock's assets under management rose 10 percent from year-ago levels to USD 3.67 trillion. The iShares exchange-traded fund business saw net inflows of USD 25.2 billion.

While there is some indication that investors are beginning to move into riskier assets like equities, Fink said that investors, consumers and business leaders are still deferring decisions given uncertainties like the "fiscal cliff" - when automatic tax increases and spending cuts take effect at the end of the year.

"If we don't solve the fiscal cliff in a bipartisan and sensible fashion, I expect to see us drift into a zero growth economy and possibly a recession in the first quarter," Fink warned.

While the fiscal cliff will be the first thing the president will have to deal with, regardless of who wins the election, Fink has been disappointed that there has not been a dialogue about how to address this looming problem.

Longer-term, Fink remains bullish and has even been constructive on Europe. He expects Europe to take seven years to fix, with plenty of volatility along the way.

"If you can handle the volatility, buy on the dips," Fink advised, noting that while Italy and Spain have more work to do the trends and competitiveness are improving.

BlackRock is the second-largest shareholder in Citigroup, whose chief executive officer Vikram Pandit unexpectedly resigned on Tuesday.

"Under Vikram's leadership, the organization has stabilized. Under his leadership the organization is moving forward. Yes, I'm not blind to the missteps," Fink said.

"Citibank is in particularly good shape. Most of their balance sheet problems are way behind them ... their brand worldwide is one of the best worldwide," Fink said.

He said investors should not be discouraged by volatility in Europe because the outlook for the debt-ridden continent is positive, although a resolution to its crisis could take seven years.

- Reuters contributed to this article.

Copyright 2011 cnbc.com

First Published:Oct 18, 2012 9:30 AM IST