OppenheimerFunds and Greenwich Associates Release Report on Growing Interest in Emerging Markets Investing by Institutions

"Institutions recognize that the expanding middle class in emerging countries will contribute to long-term global economic growth," said Steve Paddon, Head of Institutional & International at OFI Global Asset Management. "This study can help to advance conversations with institutional clients as their appetite for emerging market investments grows over the next decade."

Ten years from now, respondents believe that emerging market economic development will be driven by increasing levels of education, modernizing infrastructure and innovation. The study found that institutional investors see the shift from "old economy" to "new economy" fueling fundamental change across these markets.

"Institutional investors see the evolution of emerging market countries from resource-based, commodity-dependent economies to more diversified and dynamic economies as the dominant trend for the next decade," said Andrew McCollum, Managing Director at Greenwich Associates. "As that transformation takes hold, investment managers' ability to generate alpha will require a much more integrated investment process that focuses on bottom-up fundamentals but blends top-down macroeconomic and political perspectives."

Demand for external expertise on emerging markets in institutions is growing. The study found that nearly a quarter of endowments, foundations and corporate pensions with less than $1 billion in AUM say they expect to hire a new emerging market equity manager in the coming year, as do nearly 20% of public funds of the same size.

"Once again institutional investors are looking beyond today's markets to how they can effectively meet their future return targets," said John McDonough, Head of Distribution and Marketing at OppenheimerFunds. "We remain committed to bringing them unique insights that come from being at the forefront of global investing for almost 50 years."

In contrast to some investors shifting towards beta strategies, 78% of U.S. institutions participating believe that active strategies will be their main vehicle for obtaining emerging market exposures in the next ten years. In addition, respondents noted that 85% of European and 31% of U.S. institutions expect to incorporate environmental, social, and governance (ESG) principles into their investments in emerging countries.

Interviews were conducted by Greenwich Associates with 121 institutional investors, from the U.S. and Europe, between November 2016 and February 2017.

To read the report visit: https://www.ofiglobal.com/institutional-investors/ico/institutional-perspectives

About OppenheimerFunds

OppenheimerFunds, Inc., a leader in global asset management, is dedicated to providing solutions for its partners and end investors. OppenheimerFunds, including its subsidiaries, manages more than $228 billion in assets for over 13 million shareholder accounts, including sub-accounts, as of March 31, 2017.

In 2016, OppenheimerFunds launched a Revenue Weighted ESG Strategy which focuses on U.S. large-cap equities with highly rated ESG practices, and a Revenue Weighted Global ESG Strategy, which focuses on global large- and mid-cap equities with highly rated ESG practices. 

Founded in 1959, OppenheimerFunds is an asset manager with a history of providing innovative strategies to its investors. The firm's 15 investment management teams specialize in equity, fixed income, alternative, multi-asset, and revenue-weighted-ETF strategies, including ESG. OppenheimerFunds and its subsidiaries offer a broad array of products and services to clients, who range from endowments and sovereigns to financial advisors and individual investors. OppenheimerFunds and certain of its subsidiaries provide advisory services to the Oppenheimer family of funds, and OFI Global Asset Management offers solutions to institutions. The firm is also active through its Philanthropy & Community initiative: 10,000 Kids by 2020, reaching children with introductions to math literacy programs. For more information on the firm, visit oppenheimerfunds.com.

An investment in the strategy is subject to investment risk, including the possible loss of principal amount invested. Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes, regulatory and geopolitical risks. The stocks of companies with favorable ESG practices may underperform the stock market as a whole. The alternate weighting approach employed by the strategy (i.e., using revenues as a weighting measure), while designed to enhance potential returns, may not produce the desired results.

For Institutional Use Only. This material may not be further distributed or reproduced and may not be shown to, quoted or used with retail investors.

OFI Global Asset Management ("OFI Global") consists of OppenheimerFunds, Inc. and certain of its advisory subsidiaries, including OFI Global Asset Management, Inc., OFI Global Institutional Inc., OFI SteelPath Inc., and OFI Global Trust Company and VTL Associates LLC. The firm offers a full range of investment solutions across equity, fixed income, and alternative asset classes. The views herein represent the opinions of OFI Global and are subject to change based on subsequent developments. They are not intended as investment advice or to predict or depict the performance of any investment. The material contained herein is not intended to provide, and should not be relied on for, investment, accounting, legal or tax advice. Further, this material does not constitute a recommendation to buy, sell, or hold any security. No offer or solicitation for the sale of any security or financial instrument is made hereby.

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