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Five of the Best: Funds to profit from an ageing population

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13/11/2014
People across the world are living longer than ever as healthcare provision improves and medicine advances. But how can investors take advantage of this trend?

The OECD forecasts the proportion of over 65s globally will more than double to 16.2 per cent by 2050, with the percentage of people aged 80 and over trebling. Meanwhile, the number of people living to 100 years old in the UK has now reached a record high.

Below, five fund buyers offers suggestions on the best way to take advantage of this growing trend.

Polar Capital Healthcare Opportunities fund

Polar Capital’s £508m fund, co-managed by Daniel Mahony and Gareth Powell, has returned 146 per cent over the three years to 10 November 2014, according to FE, beating the average 109 per cent return for the Equity – Pharma Health & Biotech sector.

Darius McDermott, managing director of Chelsea Financial Services, said: “Run by two very experienced managers, one of whom used to work in the healthcare industry, the fund invests in healthcare companies of all sizes, with a slight bias towards smaller ones.

“The team look for themes in the market and identify companies, which are reasonably priced and with good growth prospects. The fund will generally hold less in the pharmaceutical sector than many of its rivals.”

Liontrust Macro Equity Income fund

The £555m fund is co-managed by Jan Luthman and Stephen Bailey, and uses macro-thematic analysis as the core of the investment process. Over three years, it has made 45 per cent, slightly undershooting the IMA UK Equity Income average return of 47 per cent.

The fund’s focus on themes has led it to have 28% in financials and 19% in healthcare, which will benefit from people living longer and the need to save for retirement.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “One of the themes running through the Liontrust fund is an increasingly ageing population, and the fund seeks to profit by investing in stocks which stand to benefit, such as pharmaceuticals.”

Worldwide Healthcare trust

Another play on the healthcare theme, the £880m trust is managed by Frostrow Capital. The trust, which invests in pharma and biotech companies across the globe, has made 152 per cent over three years and its NAV is up 135 per cent.

James Calder, research director at City Asset Management, said: “With this theme, you are forced down the healthcare fund route. Recently we have seen the emergence of some blockbuster drugs, so there is an opportunity there. We like the Worldwide Healthcare trust: most of the team are ex-doctors or researchers.”

Allianz Global Agricultural Trends fund

The £278m fund, managed by Bryan Agbabian, is a less obvious play on the ageing population theme. Despite the declining price of commodities, the fund has made 27 per cent over three years, compared to a 20 per cent fall in the Commodity & Energy sector, according to FE.

Robert Love, head of research at Asset Intelligence Research, said: “More broadly, global population growth should increase demand for resources such as food, energy and water. Following this theme, we like funds that target these areas, for example, Sarasin AgriSar or Allianz Global Agricultural Trends.”

Primary Health Properties trust

Parts of the property market are also set to benefit from an older population. An example is the £1bn Primary Health Properties REIT, which has made 35 per cent over three years.

Richard Philbin, CIO at Harwood Multi Manager, likes investment trusts that invest in nursing homes, saying healthcare is “an obvious trend” in the ageing population dynamic. Apart from Primary Health Properties, he also named the MedicX investment trust.

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