Sustained low oil prices has Ativo Capital Management avoiding investing emerging markets like Brazil and Russia in favor of the more developed economies despite market chatter of a possible recession on the horizon.

“For us, there is no sign for recession right now in the developed markets,” said Ram Gandikota, senior portfolio manager and associate director of research at Ativo Capital. “Where we are pulling back is in emerging markets affected by low oil and other commodity prices. We see the oil market as oversold. We think the oil market will remain depressed for the foreseeable future, so we will avoid those sectors.”

In the meantime, the Chicago-based money manager plans to maintain its investments in emerging markets that have less exposure to the oil markets.

“We’re are investing in India and Indonesia where the consumers are supported by local commodity prices and are not as dependent on the oil market,” he explained.”The emerging markets have been the driver of global economic growth for the past 10 to 15 years, but they’ve slowed. Now the entire global economy is depending on the slower 2 to 2.5% growth in developed countries.

Ativo Capital is bullish on the European and US markets, even though their growth rates have slowed a bit.

“Not all of the indicators are negative,” noted Gandikota. “Europe has low inflation; its GDP growth is flat; and interest rates are essentially negative. Even in the US, spending is up; automobile sales are up; and the GDP growth rate is trending up.”

The firm also plan to continue its long-term investments in China since the government is making all of the right decisions in switching from its historical high GDP growth rate to a more manageable one of 6.5 or 6.7%.

“In the long term, that rate will be much more stable for them as an economy,” he added.