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4 ETFs to Bet on Global Aging Population

Sanghamitra Saha

The global population is aging fast. The number of persons aged 60 years or above is expected to increase from 962 million in 2017 to about 2.1 billion by 2050, according to UN. The aged population comprises 13% of the global populace and is rising at a rate of about 3% per year.

The UN report says that the number of persons aged 80 or over is projected to triple by 2050, from 137 million in 2017. BlackRock noted that “by 2050 a third of the population of 55 countries will be over 60 years old.” The average life expectancy will rise to 73 in 2025 from 65 years in 1995.

While emerging markets are younger relative to developed economies, the former are aging more quickly now than previous years, per Global X. “In recent decades, China saw its life expectancy rise from 67 to 75 and its fertility rate drop from 2.8 to 1.7, now below replacement levels.”

Why Such Trend?

Lower fertility rates will result in slower population growth and aging population, per un.org. Advanced medical treatment and societal changes like urbanization and rollout of social security systems to supplement old-age income also increased life expectancy. UN report suggests that international migration has also led to changing population age structures in some countries and regions. This is because the countries that are witnessing large inflows in immigrants tend to see less overall aging population as immigrants are normally younger.

Investment Opportunities From Ageing Population

Aging global population means that a considerable amount of global disposable income is governed by the senior population. The trend results in a huge long-term care market. Janus Henderson — the ETF issuer — noted that Americans with the need of severe long-term service and support will jump to 140%. So, one can expect solid investment in the broader healthcare sectors. The long-term care market in the United States, for example, is expected to grow to $550 billion by 2024.

Against this backdrop, below we highlight a few ETFs that should benefit from fast-aging global population.

Long-Term Care ETF (OLD)

It looks to follow the Solactive Long-Term Care Index. The index tracks the performance of companies globally that are positioned to profit from providing long-term care to the aging population, including companies owning or operating senior living facilities, nursing services, specialty hospitals and senior housing, biotech companies for age-related illnesses, and companies that sell products and services to such facilities. The fund charges 35 bps in fees.

Global X Longevity Thematic ETF LNGR

The fund follows the Indxx Global Longevity Thematic Index. The index tracks the performance of companies listed in developed markets that are somehow contributing to increased life spans of the senior population worldwide. The fund charges 50 bps in fees.

Health Care Select Sector SPDR Fund (XLV)

Seniors’ spending on healthcare is expected to be $4 trillion in 2032 from $1.6 trillion in 2012. The broader healthcare fund invests 32.77% in pharmaceuticals, 24.65% in healthcare equipment & supplies, 18.95% in healthcare providers & services, 15.53% biotechnology and 7.4% life sciences tools & services. The fund has a Zacks Rank #2 (Buy).

ProShares S&P 500 Dividend Aristocrats ETF (NOBL)

By the end of this decade, 60+ population will have $15 trillion in spending power, almost double the figure noted in 2010. In the United States, this group of population has the highest median net worth than any other age group, per Global X.

So, one needs to track their investment pattern also. Since a retirement portfolio is likely to be safe and sound, dividend-growing stocks are sure to be loved by retirees. These stocks normally have strong fundamentals and safeguard investors during turbulent times.

The underlying S&P 500 Dividend Aristocrats Index of the fund targets companies that have increased dividend payments each year for at least 25 years. The fund NOBL has a Zacks Rank #2 (read: An ETF Retirement Portfolio for 2019).

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The Long-Term Care ETF (OLD): ETF Research Reports
 
Health Care Select Sector SPDR Fund (XLV): ETF Research Reports
 
ProShares S&P 500 Dividend Aristocrats ETF (NOBL): ETF Research Reports
 
Global X Longevity Thematic ETF (LNGR): ETF Research Reports
 
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