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Healthcare should be key portfolio theme

1 March 2020

Healthcare should be a key component of all investment portfolios to take advantage of an ageing population, according to Seven Investment Management. 

As the world’s population grows older, the demand for additional healthcare is poised to rise exponentially, says Terence Moll, head of investment strategy, 7IM. In thirty years two billion people will be over 65.

Moreover, the majority of companies within the sector look “reasonably valued,” says Moll.

“As people age, they spend more and more on healthcare so the long term dynamics are effectively set in stone. A portion of our US equity exposure is in healthcare, across all portfolios. Healthcare companies are well positioned for the long term to benefit from ageing populations, particularly in the developed markets, as well as in emerging markets.

“Of course, various shorter-term events can impact the sector. Healthcare companies have suffered in recent years due to politics, particularly in the US, and a lack of investment in research. That is now changing, with many of these businesses already developing technology and treatments that are customised, and targeted at a greyer population.”

While the average person in 1950 could expect to live until age 46, this number had risen to 73 by 2019.

Moll says this trend will only become more prevalent as emerging markets mature.

He adds: “This healthcare spending trend is clear in the world’s richest countries, and will increasingly spread through the emerging markets. We are seeing more demand from the middle classes in countries like China, India and Indonesia for the best drugs, nursing homes and health insurance products.”

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