In her latest market update on the Capital Insights1 podcast, Heather Peirce, Portfolio Manager & Managing Director at Black Creek Investment Management—a sub-advisor to CI Global Asset Management—delivers a candid and comprehensive commentary on the volatile macroeconomic and geopolitical landscape, emphasizing the importance of focus, discipline and conviction in long-term investing.
Volatility, Policy Shocks and the Stagflation Threat
Peirce begins by acknowledging the market tension driven by geopolitical instability and abrupt policy shifts. “Trump has announced 25% tariffs on all autos that are not manufactured in the U.S. This will have, if enforced, a crippling effect on our economy in Ontario and economies around the world, particularly the EU.” The risk of economic disruption from these policies, she notes, is real and far-reaching.
She sees these developments as part of a broader trend toward “stagflation,” a toxic mix of sticky inflation and sluggish growth. “Stagflation … coincides with much slower growth because of paralysis of investment decisions because of the uncertainty,” she says. Compounding this issue is a “rapid retrenchment of government in the U.S.,” marked by layoffs at key institutions like the National Institutes of Health, the Internal Revenue Service and the Education Department—cuts which may be bullish for deregulation in the long term but are destabilizing in the near term.
Deconstructing Global Allocation: The Risk of Overexposure to the U.S.
Peirce is particularly wary of what she views as an unsustainable global over-allocation to U.S. equities. “If you look at the MSCI World Index today, it's well over 70% exposed to the U.S. … more than double their [share of] global GDP,” she says. This imbalance, driven by investor concentration in U.S. mega-cap tech—the so-called “Magnificent Seven”—poses significant risks.
She notes that global institutions may begin to rebalance away from the U.S. amid perceived political hostility: “Large sovereign wealth funds … may be more than willing [to do this] in an environment where they feel as though they're being bullied or unfairly treated from a tariff perspective.” This potential shift could trigger further market corrections and exacerbate volatility in U.S.-centric portfolios.
Portfolio Positioning: High Conviction, Low Turnover
This external turbulence has not changed the Black Creek team’s commitment to its fundamental, bottom-up discipline. “Our strategy is that we focus on the underlying businesses, and we do 10-year discounted cash flows and solve for internal rate of return (IRR).” She reports minimal portfolio turnover over the past six months, underscoring strong conviction in their current holdings.
The team has recently leaned into high-conviction names, most notably adding to Booz Allen Hamilton—a firm Peirce sees as vital to the public sector's digital transformation. “They will solve problems [and] create solutions for cybersecurity and artificial intelligence, which ultimately will achieve that retrenchment of government footprint … into what will be much more software and services.”
Conversely, the team has trimmed exposure to names like Amadeus, a global leader in travel software. The decision was valuation-driven and reflects a broader concern about U.S. consumer balance sheets and macro headwinds to discretionary spending.
A Time for Business-Led Durability
Peirce says the strength of the Black Creek portfolios is rooted in the business fundamentals of their holdings. “The IRRs are very attractive. The free cash flow of these businesses [is] very strong.” Her confidence lies not in forecasting macro events, but in owning companies that can “take share against weaker competition…in volatile times.”
That message—resilience through Winning Businesses—is the theme of her commentary. Even as volatility rattles investor confidence, Black Creek’s approach remains steadfast: own durable, cash-generating businesses with competent leadership, and stay the course.
Final Thought
Peirce’s update is a reminder that in uncertain times, investment clarity comes not from trying to predict every geopolitical twist or inflationary turn, but from focusing on the enduring value of well-run businesses. As markets continue to price in a world of shifting power dynamics and economic realignments, portfolios anchored in fundamental research and long-term thinking may prove to be the sturdiest vessels in stormy seas.
Footnote:
1 “Global Markets Unraveled: Tariffs, Stagflation, and Strategic Investing” Capital Insights | CI Global Asset Management. CI Global Asset Management, 2 May. 2025, www.cifinancial.com/ci-gam/ca/en/expert-insights/podcasts.html.
