After a year of synchronized global expansion, 2018 brought a divergence of U.S. growth and policy away from the rest of the world. The year also saw heightened volatility, with equity and credit markets struggling as policy moves drew investors’ attention away from still-sound fundamentals.
Looking ahead, we remain optimistic that moderating U.S. growth, coupled with lower rates and decelerating inflation, will sustain the business cycle over the medium term. We believe that this environment is likely to favor quality companies that can demonstrate true earnings growth, but that heightened dispersion among those companies’ returns will necessitate careful security selection.
After 60 Years, a New Beginning
2018 brought the announcement of a strategic combination with Invesco, a significant event for our firm which is expected to close in the second quarter of 2019. The combined firm will be among the largest asset managers in the world, with $1.2 trillion in assets under management, creating significant scale for the benefit of clients and shareholders. 2019 will also mark 60 years since the founding of OppenheimerFunds, during which time we have built a legacy of outstanding client service, investment performance, and employee talent. The firm looks forward to embarking on this next chapter.
A Year of Achievements in 2018
Earlier this year we were pleased to receive nine 2018 Thomson Reuters Lipper Fund awards across five funds, highlighting the achievements of our investment teams and the outstanding performance of our global equity and municipal bond investment offerings.
We are also pleased to report a number of 2018 business highlights that reflect the positive outcomes of many of our strategic initiatives.
- We launched OFI Carlyle Private Credit Fund: This is the first strategy available through OC Private Capital, our joint venture with The Carlyle Group, and marks an important step in our ability to deliver unique solutions to investors. With this Fund, we now provide access to true institutional private credit investment opportunities in a one-of-a-kind product.
- We celebrated the first anniversary of our Factor ETFs: Our dynamic multi-factor and single-factor strategies are designed to capitalize on the cyclicality of investment factors given the macroeconomic and market environment. Oppenheimer Russell 1000 Dynamic Multi-Factor ETF (OMFL) was the top-performing large blend, multi-factor ETF for the one-year period ended November 8, 2018,1 which we believe validates the merits of our innovative multi-factor investment approach.
- We launched Oppenheimer Global Unconstrained Bond Fund: This “all-weather” total-return strategy seeks to identify and exploit multiple dimensions of currency, interest rate, and credit market regimes. We believe this approach can provide investors with the flexibility to adjust to an ever-changing market landscape and a rising interest rate environment.
- We celebrated the one-year anniversary of our SNW acquisition: April marked the anniversary of our acquisition of SNW, a Seattle-based investment manager specializing in high-quality, tax-efficient bond strategies.
Focus on Sustainability
Determined to hold ourselves to the same high standards we expect of the companies in which we invest, we remain vigilant in our efforts to operate with strong environmental, social, and governance (ESG) practices. In late 2017, we hired our first Head of Sustainable Investing, a move that signaled our commitment to participating in the profound shift toward sustainability underway in the world and in our industry. In 2018, we continued to foster a diverse workforce and inclusive company culture, and once again won numerous related industry awards, demonstrating the success we can have with this commitment. We also engaged in an Earth Week employee challenge that showed the power of small, targeted adjustments to our daily routines to make a positive impact on the environment.
To extend this opportunity to investors, we introduced a fund in 2018, OFI Pictet Global Environmental Solutions Fund, which focuses on companies that provide products or services that actively contribute to addressing environmental challenges. The Fund joins our lineup of distinct active and beta equity and fixed income strategies that offer exposure to companies and issuers with strong ESG practices.
Our commitment to community, both in the United States and internationally, continued in 2018 and we are well on our way to achieving our goal of reaching 10,000 kids with math literacy programs and other community initiatives.
We appreciate the trust you have placed in us and will continue to work hard on your behalf in 2019. As the new year gets underway, you will be receiving additional updates about our combination with Invesco.
- ^Oppenheimer Russell 1000 Dynamic Multi-Factor ETF 1-Yr Category Percentile Ranking and Return as of November 8, 2018: 1 year return (14.8%)*, Morningstar Category – Large Blend; 1-year Morningstar Percentile Rank –Top 3%, Rank #23/1,454
Source: Morningstar, as of 11/8/18, based on total returns. The Fund’s total-return percentile rank is relative to all funds that are in the Morningstar ETF Large Blend category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top performing fund in a category will always receive a rank of 1. Fund rankings are subject to change monthly. Past performance does not guarantee future results.
Oppenheimer Russell 1000 Dynamic Multi-Factor ETF (OMFL)
|Russell 1000 Dynamic Multifactor ETF (NAV)||-||-||-||-||-||-||16.86%|
|Russell 1000 Dynamic Multifactor ETF (MKT)||-||-||-||-||-||-||16.92%|
Expense Ratio: 0.29%. Inception date is 11/8/2017. Expense Ratios are estimated. The performance data quoted represents past performance, which does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so an investor’s shares, when redeemed, may be worth more or less than the original cost. For the Fund’s most recent month-end performance please visit www.oppenheimerfunds.com. The NAV return is based on the net asset value of the Fund and the market return (MKT) is based on the market price per share of the Fund. The price used to calculate MKT is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading when the Fund’s NAV is calculated at market close. MKT and NAV assume dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. Returns less than one year are cumulative.
Shares may gain or lose value. An investment in the Fund is subject to investment risk, including the possible loss of the principal amount invested. The Fund seeks to provide exposure to investments based on the following factors: value, momentum, quality, low volatility and size, and to weight such factors based on changes in the economic cycle. There can be no assurance that doing so will enhance the Fund’s performance over time. Investing significantly in a particular region, industry, sector or issuer may increase volatility and risk. Fund returns may not match the return of its respective index, known as non-correlation risk, due to operating expenses incurred by the Fund. Because the Fund is rebalanced monthly, portfolio turnover may exceed 100%. The greater the portfolio turnover, the greater the transaction costs, which could have an adverse effect on Fund performance.
Fixed income investing entails credit and interest rate risks. When interest rates rise, bond prices generally fall, and a fund’s share prices can fall. Below investment-grade (“high yield” or “junk”) bonds are more at risk of default and are subject to liquidity risk. Credit instruments that are rated below investment grade (commonly referred to as “high yield” securities or “junk bonds”) are regarded as having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes, regulatory and geopolitical risks. Emerging and developing market investments may be especially volatile. Preferred securities generally are subordinated to bonds and other debt instruments in a company’s capital structure and, as such, have a lower priority claim than more senior debt instruments. Preferred securities are subject to greater credit and liquidity risk than those instruments. Municipal bonds are subject to default on income and principal payments. Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes, regulatory and geopolitical risks. Emerging and developing market investments may be especially volatile. Eurozone investments may be subject to volatility and liquidity issues. The stocks of companies with favorable environmental practices may underperform the stock market as a whole.