the rise of the silver economy.

investment viewpoints

the rise of the silver economy.

Johan Utterman - Fund manager

Johan Utterman

Fund manager
Meret Gaugler - Fund manager

Meret Gaugler

Fund manager

For professional investor use only

The average age of the global population is on the rise and this demographic shift will force us to rethink almost every sector of society. Companies that are well placed to meet the needs of the older generation potentially stand to gain the most.

Investors recently gathered in Zurich to hear from three leading industry experts on the subject of the ‘silver economy’ and the opportunities associated with its rise. Dr Stephan Sigrist, Johan Utterman and Dr Meret Gaugler led discussions on what an ageing population means for society as a whole.

Dr Stephan Sigrist, who founded W.I.R.E - a leading interdisciplinary think tank that focuses on global trends in business, science and society, opened the event with the deep-dive investigation into the opportunities and scenarios of an ageing society.

“An ageing society as a megatrend is starting to be realised with the encroaching retirement of the baby boomer generation”, he said, referring to an estimated 10,000 baby boomers reaching retirement every day in the US alone. 

The implications of this demographic shift are enormous and there are many different potential outcomes. For example, technological ideas are almost unlimited in nature, but very few will likely be realised in a meaningful way that impacts society. A promising avenue of technology is only as good as its ability to meet the needs of a consumer class.

The average lifespan of a human being is on the rise, he said. This has obvious implications for the medical sector, but it will also affect all manner of other sectors too. There is mounting evidence that robotics will be instrumental in long-term care, for example. People who live longer and retain more mobility in later years are more likely to embrace further training opportunities. For this reason, he argued augmented reality may well become commonplace. The ability to digitally impose instructional guidelines onto a person’s field of vision has a limitless range of implications, ranging from cooking lessons to refining surgical procedures.

This societal shift will likely be gradual in nature, he stressed, emphasising the importance of taking an active approach to identifying investment opportunities. “This is going to be evolution, not a radical disruption,” Sigrist said.

Johan Utterman and Meret Gaugler, who manage LO Funds – Golden Age fund, then discussed how investors can capitalise on the ageing demographics. 
They identified a diverse range of sectors that are well positioned to benefit, including financials, healthcare, and consumer discretionary, all of which contain companies aligned with this emerging trend. 

There are also interesting implications for the travel sector, considering the current state of the retirement home space. “There are growing links between retirement homes and cruises”, noted co-portfolio manager Dr Gaugler. “Retirees are more inclined to put off the move to a retirement home for perhaps a year since a catered cruise incurs a similar cost. Demand for retirement home places is also outstripping supply, leading to a shortage of available places.” 

It is as much about identifying the companies that stand to benefit from this trend as it is about identifying the supply chain behind them. For example, the global skincare products market is expanding at a solid pace , underpinned by demand for anti-ageing products. The fund managers have incorporated suppliers of the speciality ingredients used in the production into the portfolio.

The older generation controls an increasingly significant proportion of global buying. This demographic change is one of the key megatrends shaping our world and will have a transformative effect on our economies and the companies that drive them. The silver economy represents a golden opportunity.1

 

1 Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this communication.

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