14 August 2023
An ageing population may create new challenges for the economy, public services, and the pension system, but for some individual companies it will be a boon for business, according to wealth manager RBC Brewin Dolphin.
Figures from the United Nations Population Division predict the number of people across the world aged 65 and over will double by the year 2050, reaching 1.6 billion1.
While Hong Kong, South Korea, and Japan are expected to have the highest share of their respective populations over the age of 65 by 2050, Europe will also have its challenges. In Italy 37.1% of the population will be older than 65, while Spain, Greece, and Portugal will not be far behind at 36.6%, 34.5%, and 34.3% respectively.
The UK is expected to follow the same trend, with one-quarter of UK citizens predicted to be aged 65 or over by 2050 – an increase of around 8.2 million people compared to just a few years ago2.
Rob Burgeman, senior investment manager at RBC Brewin Dolphin, said: “Sometimes investment is not that tricky. If you can see a big trend developing and you can find good quality companies that play into it, then they will more than likely benefit over time. One clear example is that there is a demographic tsunami heading the world’s way in the form of ageing populations – it will likely have a fundamental impact on many countries’ economies.
“Almost inevitably, that will entail an increased burden on social services – such as care and healthcare – as well as pressure on pension systems, with a smaller working population having to support those in retirement. But, for some businesses it will be a big opportunity – particularly those in the healthcare sector. European countries like Denmark and Switzerland have major companies in this space with ‘centres of excellence’ forming around them.
“Before you try to capture themes like these in your investment portfolio, speak to a professional adviser. They will be able to advise on the risks involved, the best way of gaining exposure for your circumstances, and the range of investment options available.”
Novo Nordisk – Rob said: “Novo Nordisk is a Danish pharmaceuticals company, best known for its diabetes treatments. But, it is also aiming to tackle other health issues that particularly affect the older population, including cardiovascular disease and Alzheimer’s. The company is the main holding in BlackRock’s European Dynamic fund and a favourite of other top fund managers.”
Sonova – Rob said: “Figures from GM Insights predict that the market for hearing aids was worth more than $7 billion (£5.43 billion) in 2022 and is expected to grow by 5.5% per annum from 2023-20323. Sonova is one of the companies set to benefit from that trend, as one of the biggest providers of hearing aid technologies. The Swiss business’s shares hit all-time highs during the pandemic but have nearly halved since, which some might see as a buying opportunity.”
Straumann Group – Rob said: “Strauman Group is also a Swiss company, but it specialises in dental implants and related equipment. More older people inevitably means a greater need for oral healthcare products and the dental implants market, specifically, is expected to have one of the highest compound annual growth rates in healthcare at 9.8% between now and 20304.”
Alcon – Rob said: “Alcon specialises in eyecare products and is best known for producing contact lenses. It is another company with Swiss roots, but was actually formed in the USA – it is jointly listed in both countries. Novartis, another Swiss pharmaceuticals group, owns the majority of the company, giving it the backing of a much larger, more diversified, and well financed business.”
Luxottica Group – Rob said: “Luxottica may not be a household name, but many of the brands it owns are. The company specialises in eyewear and includes Ray-Ban, Giorgio Armani, and Versace among its product stable, alongside retailers in the sector. As people age, they are more likely to need different types of glasses, which plays into Luxottica’s core business.”
Coloplast – Rob said: “Coloplast is a Danish company that makes products for some of the less-discussed aspects of getting older. Many of its devices are related to urology, continence, and wound care – all are likely to be growth areas for an ageing world. While it may not be the most glamorous company, it is well placed with a relatively well diversified portfolio of products.”
And for those who prefer ETFs…
iShares Ageing Population ETF – Rob said: “The iShares Ageing Population ETF does exactly what you would expect – it invests in companies that are set to benefit from the world’s population getting older. Among its key holdings are a lot of healthcare companies – making up just over 50% of the portfolio5 – and financials, largely in the form of insurers. Given how concentrated it is in sector terms, its performance has been relatively patchy.”
Disclaimers
Investment values may increase or decrease as a result of currency fluctuations. Information is provided only as an example and is not a recommendation to pursue a particular strategy. We or a connected person may have positions in or options on the securities mentioned herein or may buy, sell or offer to make a purchase or sale of such securities from time to time. For further information, please refer to our conflicts policy which is available on request or can be accessed via our website at www.brewin.co.uk. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Forecasts are not a reliable indicator of future performance. RBC Brewin Dolphin is a trading name of Brewin Dolphin Limited. Brewin Dolphin Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register reference number 124444) and regulated in Jersey by the Financial Services Commission. Registered Office: 12 Smithfield Street, London, EC1A 9BD. Registered in England and Wales company number: 2135876. VAT number: GB 365 3456 40.
– ENDS –
Rob Burgeman and his fellow investment managers at RBC Brewin Dolphin put together bespoke investment portfolios for clients based on their long-term objectives and their attitude to risk. The portfolios will have a mixture of hand-picked holdings in them including third party funds and individual stocks that are researched and recommended by RBC Brewin Dolphin’s in-house research team.
PRESS INFORMATION
For further information, please contact:
Peter McFarlane peter.mcfarlane@framecreates.co.uk / Tel: 07412 739 093
Richard Janes richard.janes@brewin.co.uk / Tel: +44 (0) 20 3201 3343
NOTES TO EDITORS
About RBC Brewin Dolphin
RBC Brewin Dolphin is one of the UK and Ireland’s leading wealth managers and traces its origins back to 1762. With £53.8* billion in assets under management, we offer award-winning, personalised wealth management services from bespoke, discretionary investment management to retirement planning and tax-efficient investing.
Our qualified investment managers and financial planners are based in 33 offices across the UK, Jersey and Republic of Ireland. They are committed to the most exacting standards of client service, with long-term thinking and absolute focus on our clients’ needs at the core.
As part of Royal Bank of Canada (RBC), we are now able to draw on the strength of a global financial institution to continue to improve the service we provide to our clients and drive further innovation across our business.
*as at 30th April 2023.
Disclaimers
The value of investments can fall and you may get back less than you invested. RBC Brewin Dolphin is a trading name of Brewin Dolphin Limited. Brewin Dolphin Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register reference number 124444) and regulated in Jersey by the Financial Services Commission. Registered Office: 12 Smithfield Street, London, EC1A 9BD. Registered in England and Wales company number: 2135876. VAT number: GB 365 3456 40.
1 Source: https://www.weforum.org/agenda/2023/02/world-oldest-populations-asia-health/
2 Source: https://www.theactuary.com/news/2019/08/2019/08/29/quarter-uk-population-be-aged-65-or-over-2050
3 Source: https://www.gminsights.com/industry-analysis/hearing-aids-market#:~:text=Hearing%20Aids%20Market%20size%20was,loss%20will%20accelerate%20industry%20growth.&text=Growing%20concerns%20associated%20with%20hearing,the%20demand%20for%20hearing%20aids.
4 Source: https://www.linkedin.com/pulse/dental-implants-market-share-size-demand-key-#:~:text=Dental%20Implants%20Market%20size%20was,9.8%25%20from%202023%20to%202030.
5 Source: https://www.ishares.com/uk/individual/en/products/284218/ishares-ageing-population-ucits-etf