InvestmentsMay 31 2013

Funds look to Japan for ageing themes

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Move over burgeoning middle classes in emerging markets; an investment theme closer to home might give you a run for your money.

As developed countries see their older cohorts balloon in size, an entire industry serving their needs is expected to profit from them.

“In the next 15 years, the 65-plus age group is expected to grow at three times the rate of 20- to 64-year-olds in Europe, the US and China,” said Johan Utterman, manager of the Lombard Odier Golden Age fund, which invests in companies that earn revenue from age-related themes.

Currently only a handful of funds are tapping this market, such as the closed-ended Polar Capital Global Healthcare Growth and Income Trust and Mr Utterman’s Golden Age fund. The chart shows the portfolio breakdown of the Golden Age fund and its heavy slant towards the healthcare sector.

The Polar Capital fund – launched in 2010 – according to Morningstar data, returned £1,425 on an original investment of £1,000 in the 12 months to 21 April 2013. Meanwhile, the Golden Age fund returned £1,353 on an investment of £1,000 in the same time period.

While Western economies are just on the cusp of seeing the older population grow in size, Mr Utterman said Japan has become the prototype for solutions in this area given the extent of its elderly population, where one in four people is aged 65 or older.

“They represent 44 per cent of consumer spending,” said Mr Utterman.