FILE PHOTO: The BlackRock logo is seen at the BlackRock Japan headquarters in Tokyo, Japan, October 20, 2016. REUTERS/Toru Hanai/File Photo

NEW YORK (Reuters) - BlackRock Inc's BLK.N largest mutual fund hiked its exposure to "select names" in energy as the sector has lagged this year, one of its portfolio managers said on Thursday.

"The underperformance of energy stocks even as oil prices have stabilized creates opportunities for investors," wrote Russ Koesterich, a manager of the $39 billion BlackRock Global Allocation Fund MALOX.O, in a note.

The S&P 500 energy sector .SPNY is down nearly 18 percent this year, while the broader index, excluding energy .SPXXEGP, is up 11 percent.

Yet Koesterich said the fund’s managers see opportunity in midstream, refining, exploration and production companies in the United States in addition to globally integrated oil companies in Europe. He did not specify any stocks in particular.

Broad market gains this year seem to have pushed the fund’s managers into a more cautious stance, including an underweight in both stocks and bonds.

Koesterich also said the fund has “slightly” raised its gold holdings and reduced its U.S. dollar exposure this year from 71 to 60 percent.

Global Allocation’s lowest-cost shares are up 9.8 percent this year, according to Thomson Reuters’ Lipper unit, beating most of its competitors.