Aging populations and demographic best bets

Investors can reap benefits of certainty

LONDON • Researchers from Imperial College London forecast that life expectancy for girls in South Korea would exceed 90 by the year 2030. A 65-year old South Korean woman in 2030 would expect to see another 271/2 years of life. It is a remarkable prediction, but the biggest surprise is that anyone should be surprised. The point about demographic changes is that they are perhaps the only things, other than death and taxes, that we can really count on.

Demographic trends are slow-moving but unstoppable. Because of this, they can be an extremely reliable basis for a long-term investment strategy. Without a crystal ball, there is not much we can rely on as investors, certainly not anything nearly 25 years out. But the changing shape of populations is unlikely to take us unawares.

When financial markets are experiencing high levels of uncertainty, the decadeslong investment opportunities across a wide variety of industries and geographies cannot be ignored. For investors in the companies on the right side of these demographic shifts, the shortterm ups and downs of share prices are immaterial.

The findings from Imperial are an illustration of one of the key demographic changes: population aging. Over the years we have often heard that improvements in longevity would come to an end. Now the 100-year life has become commonplace. Britain’s Office for National Statistics reported late last year that there are more than 14,000 centenarians living in the U.K., a 65-percent increase on a decade ago. There are nearly 1,000 people in the U.K. aged 105 or over.

Aging populations are both a cause for celebration and a source of concern. The statistics are testament to better diet and medical provision, lower child mortality and a shift away from the kind of manual labour that used to wear out our bodies long before our minds gave up the struggle. But the 100-year life creates significant challenges both for individuals and society as a whole. All those extra years of life will have to be paid for. Many people will find themselves of less money but also of spiralling demand. Other opportunities arise thanks to increased demand for leisure, travel and financial planning. These potential investments are available the world over. One interesting company, Ryman Healthcare Group, has built up a portfolio of 30 retirement villages in New Zealand, having raised only minimal funds when it came to the market in 1999. Since then it has had no need for further funding and paid out significant dividends along the way.

The first average life expectancy over 90 was just one demographic milestone passed this year. Another will pass most people by but may be even more significant: 2017 is expected to be the year in which the global