Independent Financial Advisor and Co-Founder of Affari Miei
February 23, 2024
If you are looking for information on thematic ETFs that concern the aging population then you are in the right place.
Thematic ETFs are different from those sectoral, as they don’t allow you to invest in companies which are part of a specific sector (such as Technology ETFsor the Telecommunications ETF or even him Industry Energy ETF), nor to invest in a specific strategy as Smart Beta ETFs do, or in a specific geographical area.
Instead, these are ETFs that invest in megatrends, that is, in the changes that are transforming the world permanently and on different levels, therefore both technically, economically and socially.
Thematic ETFs are focused on robotics, climate change, aging populations.
Their focus is in fact a trend that has not yet fully manifested itself. Similar ETFs that invest in these trends are becoming increasingly popular in Europe.
In this article we focus on the aging of the population, which is certainly a trend to take into consideration given that in recent years life expectancy and the average age of the population has increased in many parts of the world.
This article talks about:
Population ageing: what is meant?
The population aging trend is a relatively recent trend.
To provide some background, iShares is the issuer that manages the largest assets of these thematic segments.
Investing in the demographic sector and therefore in the aging population means investing in companies that provide products and services for the elderly or aging population, which in this sense includes those over sixty.
The trend is certainly interesting, it is due to a rapid aging of the population at a global level and to the advanced developments in medicine, which have allowed us to increase the life expectancy of the population and consequently to worry about satisfying the needs of this segment of the population .
With the increase in life expectancy it is also necessary to take into account an increasingly unfavorable ratio between the active and non-active population, and consequently the socio-economic burden related to care, assistance and social security expenses which they are intended for the elderly.
These situations require the redefinition of measures and resources intended for this segment of the population.
But why does the aging population deserve this attention, and has it become a trend in which to invest?
It demonstrates the improvement in the living conditions of the population, also thanks to advances in medicine, but it is also necessary to look at the other side of the coin: a situation of this kind could also represent a sort of threat for the future, if there were not a capacity to plan and carry out appropriate health policy interventions, especially in the field of research and care for the elderly.
In addition to the assistance measures that must be taken to guarantee the elderly well-being and care in the declining phases of their life, there is the objective of preventing and therefore implementing prevention interventions that can minimize the risk factors triggered by neurodegenerative diseases. degenerative, and aimed at promoting adequate lifestyles at all ages.
Now let’s see which fund invests in this trend.
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The ETF present on the Italian Stock Exchange
The ETF present on Borsa Italia is an equity one and is owned by iShares.
iShares Ageing Population UCITS ETF
The fund tracks the iSTOXX® FactSet Aging Population Index, which tracks companies around the world that provide particular products and services aimed at seniors (individuals over the age of 60).
The fund has a large size, as it manages a volume of 524 million euros, and was listed in September 2016, so it is quite recent.
The replication method is physicaland it hasn’t currency hedging, so it is not protected from exchange rate risk.
The one-year volatility figure is 13.67%, therefore it is an average volatility.
The fund is domiciled in Ireland and the dividend policy is accumulation, so the coupons are not redistributed over time, but are reinvested in the fund itself.
The management cost is 0.40% per year.
The risk profile for this fund is equal to 4 on a scale ranging from 1 to 7, so we are talking about a medium-high risk.
Geographical exposure sees the United States in first place with 54.56% of the companies included in the portfolio, followed by Japan with 8.62% and Australia with 4.52%.
The fund offers diversified and competitively priced access to companies that specifically provide products or services for aging populations around the world, and is also an ETF that tracks an index selected on the basis of ESG criteria.
Is it worth investing in ETFs on the aging population?
Now that I have introduced you to the only ETF that invests in the trend, we can think together and see if it could be convenient.
L’average life expectancy of people has grown steadily for decades.
To make you understand his exponential growth, in Europe in 1911 the average age of people was 49 years, while in 2019 it had risen to 80 years. Also complicit in this data on the average age is the fact that fewer and fewer children are being born in industrialized countries, for reasons that we will not go into now.
The point to focus on is that the elderly population has increased, and is destined to increase further in the years to come.
As we have seen fromsector allocationthe companies in which the ETF invests are innovative pharmaceutical companies, specialized real estate agencies but also financial companies.
The fund in this case presents a very high risk profileo: This should alert you to the risk you take and your expected returns.
The fund had had good growth until 2019, then in 2020 due to the pandemic it plummeted and recorded a historic low. However, this should not be too scary, as in 2020 many funds and many sectors in general suffered collapses; in fact, the fund currently seems to have resumed its bullish path and has been doing very well since January 2021.
If you are considering including it in your investment strategy with a view to portfolio diversification, then it could be a good idea.
Il trend it is certainly one to keep an eye on, and above all it is destined to grow in the long term, even if thematic ETFs could sometimes reserve unpleasant surprises.
It is enough that the inclusion of the ETF is done with awareness and, I repeat, with a view to diversification.
Additional Resources
If you don’t know where to start investing, then here you can find some free resources to consult:
Happy continuation!
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