Investors set to prioritise healthcare amid demographic shift
Update
Healthcare is set to get a boost after the sector was identified as ‘significantly attractive’ by 91% of institutional investors and intermediaries across Europe, Asia, and the US, according to research carried out by BNP Paribas Asset Management. The survey, which examined how demographic change has and continues to impact asset allocation, revealed healthcare was a sector of significant interest for nearly all participants, followed by the technology sector (84%), energy (67%), 'agrifood' (63%), leisure and tourism (60%), and real estate (59%).
BNP collaborated with Coalition Greenwhich for the study and the latter linked the sectors' growing attractiveness to the pandemic and climate change. Healthcare was prioritised by more investors in Europe and Asia (95%) compared to the US (75%). But diversity and equality were only deemed to be ‘extremely important by as little as 17% of investors in Europe, compared to 30% in the US and 24% in Asia.
Demographic changes have already impacted asset allocation decisions for the majority of investors across the board, the survey revealed. Nearly all those surveyed said societal shifts would influence investment decisions over the next decade.
The majority cited the acceleration of digital and new technologies as an important change that was shaping investments (95%), followed by the impact of aging populations (91%), changes to consumer spending habits (89%), and population growth in emerging markets (86%).
Over half of investors considered these changes to be investment opportunities, while 20% viewed them as risks.
In terms of asset classes, participants indicated equities (52%), real estate (50%) and infrastructure (47%) were most likely to benefit from allocations as a result.
Sandro Pierri, CEO of BNP Paribas AM said: "The findings show the extent to which demographic shifts and asset allocation considerations are interlinked with the ever-quickening pace of technology and the focus on sustainability, which requires a fundamental re-allocation of capital. This will need deep transformation in the investment industry to cater for issues such as funding the pension gap, moving from wealth creation to wealth preservation adapted to clients' risk profiles, or providing a more digital way of investing. While this presents challenges, it also creates new opportunities. Identifying the sectors set to solve these challenges and selecting the appropriate strategies can uncover long-term investment opportunities."