how healthy is the silver economy?

investment viewpoints

how healthy is the silver economy?

Meret Gaugler - Co-Portfolio Manager

Meret Gaugler

Co-Portfolio Manager

what is the ‘silver economy’?

The median age of people worldwide is steadily climbing higher. The United Nations predicts there will be over 2 billion people aged 60 years or over by 2050, up from around 900 million in 2015.

The number of retirees in developed nations is growing up to three times as fast as the number of younger people. But today’s retirees are not only numerous, many of them also have considerable spending power, having benefitted from decades of economic boom and historically high investment returns. This leads to the rise of what we call the “Silver Economy”, estimated to be a short way from being the world’s third largest economy.

This situation has far-reaching consequences for society and our economies. It also creates a multitude of opportunities for companies and investors.

what impact will this have on markets?

Companies that effectively cater to today’s retirees in helping them lead longer, healthier, more fulfilled, and financially independent lives have an opportunity to grow faster than the broader market, and on a more sustainable basis.

We are looking for companies that have staying power over the long run. High quality companies that create value for themselves and their shareholders. Companies that avoid pitfalls and risks that are tolerated a little less each day, such as treating their employees or the environment with disregard. And companies that have come up with means to meet some of the challenges associated with megatrends such as an ageing population.

One of the key challenges that our society faces is the rising burden of healthcare cost. There is a number of costly diseases associated with age that are becoming an ever-increasing burden. In our opinion, innovation is measured even today by a company’s ability to help reduce the overall healthcare cost. But increasing importance will also have to be placed on prevention and on emphasizing the responsibility each individual has for their own health. In a number of conditions, a healthier lifestyle can likely help delay the onset of costly complications.

 

how can investors anticipate growth in companies linked to healthy living?

What we eat is a good place to start. As the body ages, it needs its owner to be more mindful and find ways to assist proper functioning. Many older people are aware of this. As a rule of thumb, they are the ones taking more vitamins and nutritional supplements. Probiotics, a mix of bacterial cultures, for example can help preserve the proper function of our digestive system and are believed to lower the risk for a range of diseases from high blood sugar to blocked arteries.

But there is more everyone can do than to eat healthier. The fact that physical exercise is important goes almost without saying. Advances in joint repair like hips or knees help make 70 the new 50. But in order to find the motivation to go for a walk every day, it might help to own a dog. What we are seeing is that older people tend to value the presence of an animal companion very highly. In fact, is today’s retirees that have for the most part driven the humanization of pets we have observed in recent years. The fact is that diseases in dogs for example get increasingly treated based on the advances of human medicine. This represents a costly exercise that is paid for out of pocket.

Lastly, cognitive health is also a domain, if more difficult to pin down, where different behaviors can likely make a difference. In many cases, someone’s brain is a little less likely to leave them stranded forgetting things if it has been exercised properly over the years. Whether a Sudoku a day from the age of 50 can help push out the onset of dementia is perhaps something the world’s largest data companies are best placed to find out.

An ageing population is one of today’s megatrends that is forcing us to rethink a number of established norms. New challenges require new solutions and wellbeing in the broadest sense is one field where we see a number of very exciting ideas and investment opportunities.

important information.

Lombard Odier Funds (hereinafter the “Fund”) is a Luxembourg investment company with variable capital (SICAV). The Fund is authorised and regulated by the Luxembourg Supervisory Authority of the Financial Sector (CSSF) as an Undertaking for Collective Investments in Transferable Securities UCITS under Part I of the Luxembourg law of the 17 December 2010 implementing the European directive 2009/65/EC, as amended (“UCITS Directive”). The Management Company of the Fund is Lombard Odier Funds (Europe) S.A. (hereinafter the “Management Company”), a Luxembourg based public limited company (SA), having its registered office at 291, route d’Arlon, 1150 Luxembourg, Grand Duchy of Luxembourg, authorised and regulated by the CSSF as a Management Company within the meaning of EU Directive 2009/65/EC, as amended. This marketing document relates to “Golden Age”, a Sub-Fund of Lombard Odier Funds (herein-after the “Sub-Fund”).

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