IN­VEST­MENT STRAT­EGY

Choos­ing stocks that cap­i­tal­ize on the ag­ing de­mo­graphic.

Investment Executive - - CONTENTS - BY DWARK A LAKHAN

as the per­cent­age of peo­ple over age 65 con­tin­ues to swell to all-time highs, in­vest­ment op­por­tu­ni­ties in a broad range of sec­tors that fo­cus on older con­sumers — i nclud­ing travel, drugs, health care, longterm care and fi­nan­cial ser­vices — will po­ten­tially ben­e­fit.

Health care stands out among the sec­tors that will ben­e­fit from an ag­ing de­mo­graphic, says Phil Taller, senior vice pres­i­dent and port­fo­lio man­ager with the Macken­zie In­vest­ments growth team at Macken­zie Fi­nan­cial Corp. in Toronto.

Taller’s port­fo­lios in­vest in sev­eral firms that are among the global lead­ers in the drug sup­ply/ther­apy chain, in­clud­ing in re­search and de­vel­op­ment, tri­als and test­ing. Th­ese picks in­clude:

l Bio-Techne Corp. of Min­neapo­lis, whose key busi­ness is the sup­ply of highly spe­cial­ized pro­teins and an­ti­bod­ies for phar­ma­ceu­ti­cal re­search.

l Charles River Labs Inc. of Wilm­ing­ton, Mass., which pro­vides pre-clin­i­cal and clin­i­cal lab­o­ra­tory ser­vices for the phar­ma­ceu­ti­cal, med­i­cal de­vice and biotech­nol­ogy in­dus­tries to help ex­pe­dite the dis­cov­ery, early-stage de­vel­op­ment and safe man­u­fac­ture of novel drugs and ther­a­peu­tics.

l INC Re­search Hold­ings Inc. of Raleigh, N.C., which is one of the largest bio­phar­ma­ceu­ti­cal re­search out­sourc­ing providers in the world.

Jeff El­liott, vice pres­i­dent, port­fo­lio man­age­ment, and port­fo­lio man­ager with Sig­na­ture Global As­set Man­age­ment, a di­vi­sion of CI In­vest­ments Inc., also likes health care. Among his picks in this sec­tor are:

l Cel­gene Corp. of Sum­mit, N.J., a biotech­nol­ogy com­pany that dis­cov­ers, de­vel­ops and com­mer­cial­izes medicines for can­cer and in­flam­ma­tory dis­or­ders. El­liott says the com­pany has mul­ti­ple pipe­lines for new prod­ucts.

l Unit­edHealth Group Inc. of Min­netonka, Minn., one of the largest providers of health in­sur­ers for peo­ple who are 65 years of age or older and younger clients who qual­ify be­cause of a dis­abil­ity.

Paul Moroz, deputy chief in­vest­ment officer (CIO), direc­tor and port­fo­lio man­ager with Mawer In­vest­ment Man­age­ment Ltd.’ s global equities team in Cal­gary, says that if you take a the­matic ap­proach to in­vest­ing in stocks that will ben­e­fit from an ag­ing pop­u­la­tion, “it sounds good to in­vest in cer­tain stocks from a top-down per­spec­tive.” How­ever, he cau­tions: “From a bot­tom-up per­spec­tive, it’s hard to make money.”

Moroz also favours health care. Stocks he likes in­clude:

l John­son & John­son of New Brunswick, N.J., one of the largest drug firms in the U.S., which man­u­fac­tures sev­eral prod­ucts tar­get­ing the older pop­u­la­tion.

l No­var­tis In­ter­na­tional AG, a Switzer­land-based phar­ma­ceu­ti­cal com­pany that man­u­fac­tures lower-cost generic med­i­ca­tions.

Roche Hold­ings AG, a Switzer­land-based biotech and lab di­ag­nos­tics gi­ant, which is de­vel­op­ing on­col­ogy drugs.

Tsu­ruha Hold­ings Inc., a Ja­pan-based firm that op­er­ates a se­ries of drug­stores and is ben­e­fit­ing from ex­pand­ing mar­ket share due to the ag­ing de­mo­graphic.

Com­pa­nies that pro­vide wealth man­age­ment to older clients also are likely to pros­per, Moroz adds. He favours Toronto-Do­min­ion Bank, Royal Bank of Canada and Bank of Nova Sco­tia.

Fur­ther­more, Moroz notes, travel ap­peals to older con­sumers. Stocks he favours in­clude:

l Price­line Group Inc. of Nor- walk, Conn., the world’s lead­ing provider of on­line travel and re­lated ser­vices.

Chris­tine Tan, CIO and port­fo­lio man­ager with Ex­cel In­vest­ment Coun­sel Inc. says there’s a grow­ing trend for travel among the older Chi­nese pop­u­la­tion. Among her favourites are:

l Trav­elSky Tech­nol­ogy Ltd. of Bei­jing, the dom­i­nant provider of in­for­ma­tion-tech­nol­ogy ser­vices for China’s avi­a­tion and travel in­dus­try; the firm also op­er­ates an in­ter­net travel plat­form.

Tan also be­lieves Asia-based in­surance com­pa­nies are likely to grow. Among them is:

l AIA Group Ltd. of Hong Kong, which is the largest in­de­pen­dent pub­licly listed pan-Asian life in­surance group. IE

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