Investing in the ageing population
You’ve undoubtedly heard that Australians are living longer. The most recent Intergenerational Report for instance, projected that the number of Australians aged 65 and over would more than double by 2055, compared with 2015.
Keeping an older generation fit and healthy requires significant investment in certain areas such as healthcare and technology. Having some exposure in your portfolio to stocks tapped into this sector and their healthcare counterparts, may therefore make sense.
Investing in the healthcare sector
Australia’s ageing population will potentially provide tailwinds for decades to come, boosting the demand for drugs, surgeries, medical devices, private hospitals, medical centres and aged-care facilities, as well as services such as nursing, pathology and radiology.
It is not just Australia though. Globally, healthcare spending will grow at 4.1 per cent a year between 2017 and 2021. This indicates that healthcare spend may grow faster than the global economy, as the world population expands and medical treatments increase.
Investment options: the ageing population trend
Global healthcare indexes
One way to gain exposure to the healthcare industry is via exchange-traded funds (ETFs). Several ETF issuers have created vehicles that track global healthcare indices, giving investors access to the world’s largest listed pharmaceutical companies, medical device makers and healthcare stocks.
Be aware, however, that when investing in global markets, you may wish to consider risks such as currency risk as the Australian Dollar appreciates/depreciates against the currency in which the investment is denominated.
Australian Securities Exchange (ASX)
Alternatively, you can choose from a wide variety of local stocks exposed to healthcare. The ASX hosts Australia’s global healthcare stocks including those developing medical devices for sleeping and hearing as well as plasma based therapies. You can also get access to private hospital operators in Australia, some of the biggest in the world.
Other major domestic stocks include private hospital and medical centre operators as well as pathology, medical diagnostics, and pharmacy networks.
In the “wellness” industry, there’s also listed companies selling vitamins, bioceuticals (natural products for certain conditions), health foods, nutritional supplements and probiotics.
Possible opportunities in medical research and aged-care
Biotech – medical research
Australian medical research continues to shape the health and wellbeing of our nation, and has also proven to deliver return on investment for the Australian economy. Investing in Australian biotechnology companies however, may present a level of risk and is generally a longer-term investment proposition. This is because the treatments must pass a number of stages of clinical trials in order to reach federal approval.
The aged-care industry is also one that should benefit from the ageing population and rising spending, and it is well-represented on the stock exchange. However, the stocks have suffered from recent negative publicity concerning care practices, culminating in the announcement in September 2018 of a Royal Commission into the sector.
The other part of the profound demographic trend of an ageing population is that with advances in modern medicine, many older Australians are living healthier lives. According to the Australian Institute of Health and Welfare (AIHW), in general, Australians are not only living longer, they are enjoying more years in good health.
Stocks tapped into super
Finally, with $2.7 trillion now held in the superannuation system, the ageing population will increase outflows from this asset pool, as there will be a flow of money funding these years in retirement – although whether every retiree is able to fund a lifestyle to match their expectations cannot be guaranteed.
The point is that the nation will see a growing number of older Australians, healthy enough to enjoy their retirement and who may be prepared or are able to spend money enjoying life.
As a result, this may provide opportunities for a number of stocks tapped into the sector – less obviously than their healthcare counterparts.
Bottom line: for investors, having some exposure in your portfolio to the healthcare sector and its counterparts, may make sense given our increasing ageing population.
“I have been with Capstone for over three years and have found them refreshing to deal with. They help you become the best version of your business. I can wholeheartedly commend Capstone to any planner.”
Bronson Financial Services
“At a time of industry upheaval, the support of Capstone has been a godsend. Everything they promised they delivered.If you are looking for a new licensee you cannot beat the Capstone service offering."
Canyon Financial Planning
“Capstone Financial Planning should be at the top of your list for a Licensee. Grant and his amazing team give a down to earth and personalised approach to supporting practices.”
“Capstone have some of the highest quality individuals in their team and it’s a pleasure to benefit from their insight and assistance. We really can’t recommend them enough to anyone considering a licensee.”
Strategic Retirement Solutions
“I recommend Capstone to any adviser seeking to 'go out on their own'. They are a fabulous licensee!”
Everalls Wealth Management
“With Capstone I can operate my business free from conflict. They have no in-house products, a flexible APL, and an extensive list of SMA solutions. I recommend Capstone highly.”
“I can highly recommend Capstone for planners seeking an independent licensee that’s not in your face but provide quality support services. Their service and support is second to none and has allowed us to concentrate on providing our clients with a premium level of service.”
“Having been with Capstone for a number of years, one thing that really stands out is their willingness to help and can do attitude. These are qualities we really appreciate.”
“The team at Capstone are all genuinely really good people. They are remarkable with their service culture. They really do care what you think, and they are genuine about our joint success into the longer term.”
Benchmark Financial Planning
“During times of change, it has been reassuring to be with a licensee that regularly engages with advisers and takes feedback seriously.”