Investing Megatrends: Mass Affluence
- The move toward “Mass Affluence” is one of the world’s durable investment themes
- Demand from the billions moving into middle class is affecting several key industries
- Global brands headquartered in developed markets may be big beneficiaries
At this moment, approximately 3 billion people – close to 40% of the world’s population – are moving to something approximating a middle-class standard of living.1 This move toward “Mass Affluence” is one of the world’s truly important and durable investment themes.
This megatrend is fueled, in part, by a one-time demographic bulge which is substantially reshaping the global economy. Of course, the growth of the middle class has happened before in places such as Western Europe and the United States. But those movements took centuries. Today’s move out of poverty is happening over a period of a few decades.
The move toward Mass Affluence is relatively borderless. Surely there are many fast growing firms based in the emerging markets that will take advantage of the megratrend. But some of the major beneficiaries of the growth are the well-regarded global brands headquartered in developed countries. This is true in an array of industries, including autos, luxury goods and beverages.
Mass Affluence is not really about becoming rich. It’s about a progression to increasing discretionary income. Demand from those 3 billion people is driving the marginal demand of hotel rooms, mobile phones, and a multitude of other goods and services. This is not a short-tailed event either, and one that likely won’t be stopped by any ordinary economic cycles.
A globalized portfolio, a set of equities that provides exposure to the companies that cater to the needs of the new emerging market consumer class, may be an attractive opportunity for patient, long-term investors. While global equities may have their ups and downs, the Mass Affluence megatrend goes beyond borders and has structural, not just cyclical, growth potential. In fact, periods of controversy may provide a good entry point for this durable, decades-long theme.
The Brookings Institution. “The New Global Middle Class: A Cross-Over from West to East” (March 2010).
These views represent the opinions of OppenheimerFunds and are not intended as investment advice or to predict or depict performance of any investment. These views are subject to change based on subsequent developments.
Foreign investments may be volatile and involve additional expenses and special risks including currency fluctuations, foreign taxes and political and economic uncertainties. Emerging and developing market investments may be especially volatile. Investments in securities of growth companies may be especially volatile. Small and mid-sized company stock is typically more volatile than that of larger, more established businesses, as these stocks tend to be more sensitive to changes in earnings expectations and tend to have lower trading volumes than large-cap securities, creating potential for more erratic price movements. It may take a substantial period of time to realize a gain on an investment in a small or mid-sized company, if any gain is realized at all. Diversification does not guarantee profit or protect against loss.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.
Before investing in any of the Oppenheimer funds, investors should carefully consider a fund's investment objectives, risks, charges and expenses. Fund prospectuses and summary prospectuses contain this and other information about the funds, and may be obtained by asking your financial advisor, visiting oppenheimerfunds.com, or calling 1.800.CALL OPP (225.5677). Read prospectuses and summary prospectuses carefully before investing.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.
Two World Financial Center, 225 Liberty Street, New York, NY 10281-1008