Market Overview

How To Bet On An Aging Population

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How To Bet On An Aging Population

For years, data have pointed to increasingly older populations in some of the world's largest countries. The typical ways of playing that theme include health care stocks and exchange traded funds.

Not all health care investments are as levered to the aging theme as they appear to be at first glance.

What To Know

The Global X Longevity Thematic ETF (NASDAQ: LNGR) is an example of a thematic ETF that directly focuses on the aging theme. LNGR, which turns three years old in May, follows the Indxx Global Longevity Thematic Index.

While LNGR has just $17.1 million and leads an anonymous existence among health care ETFs, the fund's overlooked status should be shed due to its stellar performance. LNGR is up 13.48 percent this year, beating the largest traditional health care ETF on a year-to-date and trailing 12-month basis.

Why It's Important

“Health systems are already anticipating greater demand among aging populations for senior services including housing and care, medical devices, and pharmaceuticals for advanced age-related diseases,” according to Global X research. “Technological innovation is only accelerating this trend, as new ways to support healthy aging, from personalized medicine to complex medical diagnostics and medical service robots, continue to proliferate.”

LNGR allocates 36.41 percent of its weight to health care equipment sectors, one of the best-performing corners of the sector going back several years. By comparison, the Dow Jones U.S. Health Care Index devotes just 22 percent of its weight to healthcare equipment manufacturers.

Medical devices, including wearables, will “become especially important as more adults express interest in living at home as they age. 76% of those aged 65 and older in the US already say connected care technology is important to improving home healthcare services,” said Global X. “The wearables market is expected to double by 2022, reaching $27 billion in sales.”

What's Next

Health care real estate investment trusts and facilities, groups that combine for about 11 percent of LNGR's weight, are also expected to see exponential growth in the years ahead.

“Many seniors should benefit from the availability of assisted care services like housekeeping, dining assistance, transportation, emergency response systems and much more,” said Global X. “The long-term care market in the US, for example, is expected to grow to $550 billion by 2024.”

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