Ageing population (AGED) : Back in trend

The UCITS AGED UCITS (iShares) ETF created in 09/2016 is quoted in USD on the LSE but also in Euro in Italy and on German Xetra, and replicates the iSTOXX Index FactSet Aging Population Index consisting of 255 companies from 20 countries on five continents and allows diversified access to companies that specifically provide products or services to the "senior" population of the planet (those aged 60 or over).

The fees are 0.40% and the AUM are $ 255M. Replication is direct and there is a dividend capitalization policy.

Alternative ETF: WHEA (SPDR in USD)

Latest developments

AGED recorded an increase of 22.6% in 2017 and increased slightly in 2018 to + 1.3%.

The valuation of the sector is around 17x current earnings, which remains acceptable for a growth sector consisting of companies whose profits are growing at around 10% per year on average.

The strong composition of the index in financial stocks and health stocks, for about 77% of the capitalization, implies a sensitivity to the interest rates which are currently on the upward trend in the US, which is a major factor for the insurance companies but there is also a significant growth component through the US Medtech sector mostly technology driven.

Most of the market capitalization is done by developed countries, and emerging countries are not very well represented for the moment, which is a positive factor in the short term-emerging markets being under pressure from currencies-but at the same time a reservoir of long-term growth.

 

 

Index & components

The ETF AGED is made up of companies that will benefit from the growing needs of an older global population - the health and pharmaceutical sectors, finance, senior care and consumer services.

The interest of this index is above all its very great depth (255 companies), its great geographical diversity with 20 countries represented on the 5 continents with 35% for the USA, 11% for Japan, 7% for the United Kingdom; 6 for Australia, 5% for Korea and 2% for China.

But diversification is also sectoral with 40% of financial stocks, 37% of health stocks, 16% of goods & consumer services and 6% of real estate. Among the 10 values ​​with the highest weighting are health values ​​such as Juno (a US compaby specializing in the treatment of cancer), Abiomed (a US Medtech specialized in cardiac prostheses) or the Chinese insurance company Ping An Insurance Co of China and also the Brazilian tourism agency CVC Operadora and Agencia de Viagens.

This ETF represents the opportunity to invest in a "Megatrend" because the world population is aging very quickly: between 2000 and 2050 the proportion of the world population over 60 will double from about 11% to 22%. The absolute number of people aged 60 and over is expected to increase from 605 million to two billion over the same period. Low- and middle-income countries will experience the fastest and largest demographic change. Thus, it took more than 100 years for the share of the French population aged 65 and over to double, from 7 to 14%. In comparison, it will only take 25 years for countries like Brazil and China to experience the same growth of their aging population.

The aging of the population is becoming one of the most important social transformations of the 21st century, with repercussions in almost all sectors of society, particularly in the world of work, in the financial markets, demand for goods and services, such as housing, transport or social protection. The aging of the population also profoundly influences family structures and intergenerational links. In 2017, about 962 million people are aged 60 and over, representing 13% of the world's population. This rate increases by about 3% per year and by 2050, all continents except Africa will have more than a quarter of their population aged 60 and over.