Key takeaways: 

• Many OECD countries are currently bearing witness to an ageing population, with the number of individuals aged 65 and over expected to grow over the coming decades. 

• This trend is expected to provide a tailwind for spending and growth in areas such as healthcare, pharmaceuticals, medical innovation, aged care and retirement living, and wealth management. 

• There are numerous ETFs offering broad-based exposure to companies with either a direct or indirect association to an ageing population. 

• Past performance is not an indicator of future performance. It is important to do your own research before investing. 

According to the Australian Institute of Health and Welfare, there were an estimated 4.2 million Australians aged 65 and over as at June 30, 2020. This represented 16% of the overall population, compared with 8.3% (1.0 million individuals) and 12% (2.1 million) in 1970 and 1995 respectively.  

By 2066, Australians 65 and over are forecast to make up between 21% to 23% of the overall population. In fact, one estimate even suggests more than 22% of Australians will be aged over 65 by next year. 

This demographic shift is also playing out across countries like the United States, Japan, and much of Europe, with implications insofar as reshaping economic landscapes. And with ageing populations demanding more resources to keep people alive for longer, this means that areas like health spending and aged care are in the spotlight, while there are also reverberations for other industries such as pharmaceuticals, medical innovation, and wealth management, among others. 

With each of these segments supported by a structural tailwind, the ASX and US share markets play host to various investment opportunities. For investors eyeing exposure to the established trend that is an ageing population, here are some options to consider. 

Healthcare operators 

One of the central premises associated with an ageing population is growing demand for healthcare services. This is based on the notion that as we age, we tend to experience more health issues, and instances of conditions like cardiovascular diseases, arthritis, and cancers tend to increase, notwithstanding the fact that the average lifespan has increased markedly over the last century.  

In addition, modern practices place a high emphasis on proactive health screening, which has underpinned the demand for services that test for and/or detect certain diseases, infections, or other health conditions. Accordingly, there are various opportunities across investments related to the likes of imaging, pathology, endoscopy, biopsy, and related diagnostics. 

On the ASX, Sonic Healthcare (ASX: SHL) and Integral Diagnostics (ASX: IDX) specialise in diagnostics focused on the early diagnosis of conditions, while Pro Medicus (ASX: PME) has established itself as one of the largest informatics companies providing the software that facilitates medical imaging, radiology information systems, and other patient management requirements. 

Meanwhile, ASX-listed Ramsay Health Care (ASX: RHC) operates a network of hospitals and day surgeries, whereby a higher volume of elective procedures and inpatient demand are tailwinds. Similarly, US-listed HCA Healthcare (NYSE: HCA) is a for-profit operator of health care facilities.

Pharmaceuticals suppliers

Aside from diagnostics and hospitals, medicine continues to play a key role in the treatment of both minor and major health conditions. This means that companies involved in producing, or even distributing and selling pharmaceuticals provide exposure to an ageing population.

The US stock market is home to numerous pharmaceutical giants, including Johnson & Johnson (NYSE: JNJ), Pfizer (NYSE: PFE), Eli Lilly (NYSE: LLY), and Novo Nordisk (NYSE: NVO), to name but a few. They produce a number of treatments targeting age-related conditions.  

Both UnitedHealth Group (NYSE: UNH) and CVS Health (NYSE: CVS) are involved in care delivery models that service retirees, with the former also offering insurance coverage, and the latter also a retailer of pharmaceutical medicine. 

Locally, the ASX features various pharmaceutical names. CSL (ASX: CSL), a biopharmaceutical firm, oversees a portfolio of lifesaving medicines and vaccines, mostly for chronic and rare conditions. 

Sigma Healthcare (ASX: SIG), which owns Chemist Warehouse, operates chemists around the country, while EBOS Group (ASX: EBO) is a major wholesaler and distributor of healthcare, medical, and pharmaceutical products. 

Medical device manufacturers 

While many investors might be inclined to associate the treatment of health conditions with invasive procedures and medicine, the growing sophistication of technology has opened new frontiers in providing better outcomes to older individuals. 

Technology now facilitates the likes of robotic surgery, telemedicine, health monitoring via wearables, as well as supporting better quality of life. For example, Cochlear (ASX: COH) and ResMed (ASX: RMD) are two ASX-listed businesses designing novel products designed to help manage health conditions.  

In the case of Cochlear, its hearing implants serve a demographic that typically sees a loss in hearing. On the other hand, ResMed’s sleep apnoea masks offer respite to those with respiratory conditions, which are often more prevalent among older adults. 

Overseas, Intuitive Surgical (NASDAQ: ISRG) has experienced rapid growth over recent years as its robotics products promote minimally invasive surgery — a practice only expected to grow amid an ageing population. And then there are names like Medtronic (NYSE: MDT), a company which leverages innovative technology across its portfolio of products that range from pacemakers, to insulin pumps, surgical instruments, and neurostimulation devices. 

Aged care and retirement living 

An ageing population also creates a tailwind for the residential aged care and retirement living industry. This industry generally garners attention from elderly individuals seeking lifestyle accommodation that offers a balance of healthcare support and independence. 

While the ASX was once home to numerous residential aged care providers, there are far fewer options on the local market today, albeit Regis Healthcare (ASX: REG) is the largest among those offering pure-play exposure to this theme. 

Meanwhile, lesser-known Lifestyle Communities (ASX: LIC) is focused on the development and operation of land lease communities, which provide affordable housing options to Australians over 50 years of age — a cohort expected to grow amid an ageing population. 

Investors also have options to consider on the US market, including Brookdale Senior Living (NYSE: BKD), which as the largest operator of senior housing in the United States specialises in assisted living. Other aged care operators with at least some exposure to this theme among the property it manages are CareTrust REIT (NYSE: CTRE), Welltower (NYSE: WELL), and Ventas (NYSE: VTR). 

Wealth management 

As the population grows older, there is expected to be growing demand for certain types of financial services, namely those tied to retirement planning. After all, retirement brings with it a significant shift in lifestyle and finances, so it follows that wealth management is a topic where many individuals seek out financial advice. 

Said advice is often complex, extending beyond superannuation services, to the likes of asset management, annuities and income generation, insurance products, and even estate planning. These are key drivers in the demand for wealth management services and retirement income solutions. 

There are numerous companies on the ASX that fit into this space. For example, some of the most well-known shares are AMP (ASX: AMP), Insignia Financial (ASX: IFL), Challenger (ASX: CGF) 

Similarly, superannuation platforms and administrators Netwealth (ASX: NWL) and Hub24 (ASX: HUB) are leveraged to the current trend that sees retiring Australians seeking tailored advice-led investment solutions that offer customisation and flexibility to meet their complex needs. 

There is also no shortage of similar firms in the US, albeit at a much larger scale. Firms include Charles Schwab (NYSE: SCHW), BlackRock (NYSE: BLK), and Prudential Financial (NYSE: PRU). 

ETFs with exposure to an ageing population 

Of course, investors may also seek out broad-based exposure to mitigate the risks associated with investing in individual stocks leveraged to an ageing population.  

Locally, there are various ETFs that tap into this theme, including Global X S&P Biotech ETF (ASX: CURE), Betashares Global Healthcare ETF (ASX: DRUG), and iShares Global Healthcare ETF (ASX: IXJ). Each of these funds provide exposure to a diversified basket of companies that, while not exclusive to the ageing population theme, do capture key industries directly influenced by an ageing demographic. 

On the US market, niche options focused on the theme exist courtesy of the Global X Aging Population ETF (NASDAQ: AGNG), but there are also broader options like the iShares US Medical Devices ETF (NYSE: IHI) and the Vanguard Health Care Index Fund ETF (NYSE: VHT), among others. 

An unfolding opportunity 

With an ageing population at hand, it is expected that demand across the likes of healthcare, pharmaceuticals, medical innovation, retirement living, and even wealth management will only grow. 

For investors, both the US and the Australian investment landscapes offer a range of established and emerging companies at the heart of this demographic change, while ETFs provide a cost-effective and risk-adjusted method with which to gain exposure to this theme.