Oppenheimer 60th Anniversary - 59

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Rochester Division: Mastering Municipals
2002

Outwardly, the contrast between
Rochester Funds and OppenheimerFunds in the
1980s was striking. While OppenheimerFunds
was busy moving into the World Trade Center
in bustling Lower Manhattan, Rochester's small
team was operating out of a modest office in a
snowy city on Lake Ontario.
But what Rochester lacked in size, it more than
compensated for in performance. After founding the company with a single equity fund, Ron
Fielding launched the Rochester Municipals Fund
in 1986 and rapidly built a reputation as one of the
nation's most astute bond fund managers.
Fielding introduced a new flair to what many
investors considered a staid segment of the market.
He looked for non-mainstream and credit-

schemes." Before running its course, the scandal
would implicate many major mutual fund companies. Not only did these companies pay hundreds of
millions of dollars in fines and settlements, but they
also suffered a decline in investor confidence that
cost them untold billions in current and new
investments.
OppenheimerFunds, however, came through
the scandal unscathed, thanks to its deeply
ingrained core values and business principles.
OppenheimerFunds had always taken a prudent
approach to business and followed protocol to the
letter. "There has been zero tolerance for anything
that would create the appearance of a conflict of
interest," said Art Steinmetz, who started with the
Company in 1986 and is now chief investment
officer for fixed income.
In the midst of the industry's troubles and the
economic downtown, OppenheimerFunds reached
a major milestone that dramatically symbolized
the Company's stability. In fall 2003, just two years
after losing its headquarters, OppenheimerFunds
returned to Lower Manhattan and moved into new
offices at Two World Financial Center.
OppenheimerFunds assets under management pass
the $150 billion mark.

sensitive municipal bonds whose marginal additional
risk was outweighed by a potential to deliver higher
returns. He also employed a "barbell" strategy of combining short-term and long-term bonds.
His approach worked. Just two years after introducing Rochester Municipals, the company was roughly
doubling its assets under management every year. By
1995, Rochester Funds was managing $2.6 billion.
As Rochester Funds grew, Fielding struck up a
professional friendship with Jon Fossel, then chairman
and CEO of OppenheimerFunds, through the two
men's service on the Investment Company Institute
(ICI) board of directors. Fielding came to respect
OppenheimerFunds' values, and Fossel came to see
Rochester as a company with a similar entrepreneurial drive. "Jon was looking for a way to significantly

John V. Murphy explained why the move was so
important to the Company. "If you ask me if it was
difficult to justify our decision to return back downtown, I'll say absolutely not," Murphy said in a 2004
speech. "It's where we belong. Our roots are in New
York City's Financial District. It's where we began
more than 50 years ago, when Max Oppenheimer
founded a small investment firm. It is where we
started managing a single mutual fund in 1959 and
grew into a thriving asset management company."

strengthen OppenheimerFunds' municipal bond
group," Fielding said. "They were respectful of what
we had built up and were very careful not to change
the investment flavor of our office."
In 1996, OppenheimerFunds acquired Rochester
Funds. Management of OppenheimerFunds municipal
bond funds shifted gradually to the new division, and
in 2002 the Company's entire municipal portfolio was
moved to Rochester.
The brand and performance of the Rochester
funds have played an important role in the growth of
OppenheimerFunds. By 2008, the Rochester division
managed 18 funds with $32 billion in assets under
management and was regarded as a leading municipal
bond fund manager within the industry. n

also expanded its institutional and retail sub-advisory
businesses.
Much of the growth in OppenheimerFunds'
mutual funds, which was occurring at the same time
that the Company was diversifying its asset base,
resulted from capturing a portion of the huge flows of

POSITIONED FOR GROWTH
As the markets shook off the effects of geopolitical
uncertainty in 2003, OppenheimerFunds reaped the
rewards of the hard work it had invested in building
its organization and restructuring to expand its reach.
From year-end 2002 to 2007, assets under management, profits, and retail sales all rose substantially.
A focus on affluent and institutional investors
increased the percentage of the Company's asset base
in areas beyond its core retail products. At the start of
2008, OFI was managing assets for 99 clients, and the
high-net-worth business line had become a leading
player in 529 college savings programs. The Company

2003
Under the guidance of CEO John V. Murphy, OppenheimerFunds
moves into Two World Financial Center.

2003

2001-2009 Crisis and Transformation *

Oppenheimer 60th Anniversary

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