Seniors
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When considering the economic impact of senior citizens, it all starts with “the longevity economy.” That is: People who live longer, work longer, and buy more over their lifespan. Longer lifespans are good for the economy.
The catch, of course, is that longer lives don’t necessarily mean healthier lives. Therefore, we can anticipate greater demand on the healthcare system in the future. But we might also expect innovations in the form of tools that help manage chronic conditions, medications that contend with common diseases, and other initiatives that help keep seniors healthier for longer.
Here’s what investors should know about the connection between aging and the economy.
What Is the Senior Market?
Aging isn’t what it used to be. In 1920, the life expectancy in the US for men was 53 and for women, 54. Life expectancy in 2017, almost 100 years later, was 79.6. By 2060, life expectancy is expected to reach 85.6. By 2060, it is anticipated that there will be nearly 100 million Americans who are 65 or older.
What does that mean for the economy? It’s not all bad.
For one, seniors are working longer than ever. Among people aged 65 to 69, the labor force participation rate has risen from roughly 28 percent in 1998 to 38 percent in 2019 for men and from about 18 percent in 1998 to 30 percent in 2019 for women. In part, that’s because the senior population is also more educated than ever before, with some senior members still driving the economy with new and innovative ideas. For example, people between ages 55 and 64 made up nearly 26 percent of new entrepreneurs in 2017, according to the Kauffman Foundation. In 2007, that figure was only 19 percent.
Why Invest in the Senior Market?
Even if seniors live healthier for longer, the growth of an aging population will inevitably mean increased healthcare costs. But, as the aging population swells, it’s likely that innovation will replace some of healthcare as usual. Healthcare for the aging population is likely to be driven by the following trends, which investors should consider.
Streamlined Preventative Care: Lots of Baby Boomers have various chronic conditions, which they manage via medication, doctor visits, and preventative health care. These include diabetes, obesity, and high-blood pressure, among other conditions. Aging and comorbidities can also lead to more detrimental (and expensive) diseases including Alzheimer’s, diabetes, cardiovascular diseases, and osteoporosis associated with falls, according to a report by the Global Coalition on Aging. These and other conditions, including loss of vision, hearing, bladder control, or skin health, negatively impact independence and result in additional costs.
Effective preventative care can decrease the rate at which chronic conditions deteriorate and more expensive healthcare issues develop. As seniors age, we can expect improved preventative care to be a primary focus of most health systems.
Remote Patient Monitoring (RPM) Devices: Remotely monitoring patients is proven to have a big impact on health outcomes, including significantly decreasing the number of readmissions and preventing medical emergencies. For seniors, these devices can also translate to increased independence.
While telehealth is more widely accepted, especially since the pandemic, so too is connected health. Connected health devices track health metrics remotely and have the potential to help the healthcare system manage the growth of the senior population. As we emerge from the pandemic and look to the swell of the senior population, we can expect industry growth for the remote monitoring devices designed for older adults.
RPM devices are particularly helpful for managing chronic disease and post-acute needs, as well as ensuring patient safety. Notably, when used by patients and caregivers, they significantly improve both self-management of care and communication with clinicians.
Immunization Imperative: In the US, vaccination recommendations for the elderly include those for seasonal influenza, pneumococcal disease, and reactivation of varicella zoster virus (VZV). In many countries around the world, regular booster shots against tetanus, diphtheria, pertussis, polio are also recommended in the elderly. That’s all before the COVID vaccine, which infectious disease specialists are hoping to make it into the arms of the elderly worldwide (and could potentially be added as an additionally recommended annual vaccination).
It is anticipated that, as the elderly population grows, the annual societal economic burden for the four vaccine-preventable diseases will increase from approximately $35 billion to $49 billion. That amounts to a cumulative cost of approximately $1.3 trillion and more than 1 million disease-related deaths, before COVID.
As the number of seniors grows, so too will efforts to vaccinate them, which will be good business for the drug companies that manufacture vaccines.
In-Home Care: More and more baby boomers are “aging in place,” or planning to stay in their homes rather than move to a senior living facility. And it’s working, particularly because of increased preventive care and better management of chronic conditions. Improved home care can benefit the elderly and reduce associated healthcare costs, according to the Global Coalition on Aging.
Senior Living: Of course, not all seniors will be able to stay home even if they want to. Elders generally move into senior living facilities at age 83. In 2029, the oldest of the baby boomer generation will turn 83, at which point the senior living industry can anticipate an influx of demand.
Senior living investments tend to be recession resilient, according to Haven Senior Investments. According to the National Council of Real Estate Investment Fiduciaries 2018 property index results, the total return for senior housing real estate on a ten-year basis was 10.52 percent. Senior housing outperformed the overall property index of 6.09 percent and apartment total returns of 6.10 percent.
Everyone ages, and the senior population is destined to grow. Senior care will require lots of money, which is an opportunity for the healthcare sector, particularly as healthcare innovations provide more personalized and efficient care.
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Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the February 24, 2021 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer or custodial services.
FINSUM + Magnifi: Here's How ESG Flows Really Work
(February 2021)
When the average investor conceptualizes an ESG investment they are picturing diverting funds to a growing new wind energy company or a carbon-neutral delivery service. The reality is that technology companies comprise a bulk of ESG investment, and not because they are green in an intuitive sense but because they have little need to pollute. Here is an example of how that plays out: Asia captured 83.33% of emerging market ESG investment because of its heavy tech weighting. Taiwan Semiconductor Manufacturing, Tencent, and Samsung are the big tech companies generating returns for Asian EM ETFs over other regions.
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FINSUM + Magnifi: How to Capitalize on the US Energy Crisis
(February 2021)
The polar vortex sweeping across the south has left many American’s without energy, but investors are not as powerless in their response to this weather phenomenon. For those who were scared of the volatility in oil prices, electrical equipment suppliers may be on the move. The vortex has exposed electrical grids in deep need of investment. This market was already in a relatively good position as the economy picked back up boosting demand for electrical services. The nation’s expanding alternative energy sector also amplifies electrical suppliers as the intricacies of renewables complement their growth. John Inch, an analyst for Gordon Haskett looks to Eaton (ETN) to capitalize on the older U.S. electrical Grid. Other investors are turning to Quanta Services (PWR) and MasTec (MTZ) to capitalize on the energy crisis. Both stocks exceeded early-week price targets.
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FINSUM + Magnifi: The Nasdaq Correction May Be Signaling a Bear Market
(February 2021)
The market had eagerly awaited Fed Testimony before Congress on Tuesday as investors wanted clarity on rising inflation concerns, but it appears investors didn’t take the ‘sit and wait’ approach. A bearish surge in overnight trading and on open primarily in tech stocks weighed the market down. Inflation concerns are driving this slump as many tech companies are dependent on cash flows. Tech concentrated index NASDAQ already had a hard Monday down 2.5% but fell off another 1.8% on Tuesday. What would normally be a bullish sign for markets appears very bearish as Powell tells congress inflation is soft and the Fed remains on track to hit its target. Treasury yields have been on the rise as the markets are in lockstep with the Fed, hitting an annual high of 1.39%. Powell says that it will move patiently and slowly telegraphing its moves amid inflation pressures.
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Pets
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We call them our fur babies, we treat them like humans, and we don’t hesitate to spend money on them. The “humanization of pets” trend is real— and likely, many of us can relate. According to Packaged Facts, 56 percent of US households have pets. 40 percent of those households have dogs, which reflects an exponential rise in dog ownership over the past decade.
In a normal year, Americans adopt 3.2 million shelter animals. That was before the pandemic, which didn’t stifle all industries like it did travel and entertainment. Far from it. As the world shifted into a COVID-19 driven lockdown, people looked to add pets to their lives. More than 3.3 million pets found homes in 2020, according to Petco. That represents an increase of 4 percent in 2020, translating to $4 billion in incremental annual demand, according to Packaged Facts.
The pet industry is booming in the pandemic world. Here’s what investors should know.
What Does the Pet Industry Include?
In 2019, Americans spent $95.7 billion on their pets. In 2020, it is estimated that Americans spent $99 billion, according to the American Pet Products Association. Taking care of pets requires pet food, treats, supplies, medicines, veterinary care, and services including boarding, grooming, insurance, training, pet sitting and walking.
According to Petco, the US pet care industry serves 72 million households. And while the US is home to many dog and cat lovers, pets include other animals, such as birds, lizards, fish, and hamsters, amongst others.
Why Invest in the Pet Industry?
Even before the pandemic, pet ownership was on the rise. Part of that was driven by Baby Boomers, who control over 53 percentof the country’s wealth. According to Packaged Facts, pet ownership among Baby Boomers increased from 50 percent to 54 percent between 2008 and 2018. This growth was in part attributed to Baby Boomers having more time at home, becoming empty nesters, etc.
Then the pandemic hit, and we all found ourselves with a lot more time at home. And lots of us added pets to our families.
This increased demand for pets spurred the pet industry.
In January 2021, Petco Health and Wellness hit the market with a bang, closing up more than 63 percent. In an interview with MarketWatch, Petco’s Chief Executive Ron Coughlin explained why: “People are home for COVID, they’re a little depressed, and they want that bundle of joy.”
The pandemic has not only shown how resilient the pet industry is, but also how much our pets mean to us.
According to Rachael Silverman, a psychologist specializing in couple and family psychology, in an interview with TIME magazine, “With so much uncertainty and instability, animals provide people, especially children, with unconditional love, support, and comfort as well as serve as a distraction.”
These strong sentiments help to explain why, these days, the average pet lover won’t just settle for any pet products and services. They order subscription boxes to delight their pup, upgrade to organic foods, and shop specialty toys and treats. Hence, pet companies big, small, and creative are seeing increased consumer demand.
The Farmer’s Dog, for example, makes fresh and personalized meals for dogs. It raised $39 million in 2019, the largest Series B round for a pet startup. Barkbox, a subscription service for dogs, merged with blank-check company Northern Star Acquisition Corp in December 2020. The deal reportedly valued BarkBox at $1.6 billion, and will result in BarkBox going public. Online retailer Chewy also saw enormous growth in 2020. The company’s active customers grew 39.8 percent year-over-year to 17.8 million and customer spending was up as well, growing 2.8 percent from a year ago and now averaging $363 per year.
According to the 2017-2018 National Pet Owners Survey from the American Pet Products Association, 28 percent of dog owners surveyed indicated that they celebrate birthday parties for their dogs. We can take a wild guess that that number will be higher in 2021… and that means a lot of pet owners will be shelling out for dog birthday cake.
Pet expenses are here to stay once you add a pet to your family, and so it’s safe to say that with so much demand for pets this past year, the pet industry demands won’t be going away anytime soon. All of these pets purchased or adopted in 2020 will require care, vaccines, medicines, supplies, toys, and treats for years to come.
Perhaps not surprisingly, just like the world of health and wellness for humans, there are innovators in the pet health space, as well. The 2021 Purina Pet Care Innovation Prize Winners include Denver-based ClueJay, an online diagnostic platform for pets and their vets; Minnesota-based Kitty Sift, which offers a litter box made from 100 percent post-consumer recycled cardboard; A Pup Above, which makes fresh dog food with more protein; and Mella Pet Care, which tracks pet health.
While not every year will be a pandemic year for pets, there is no arguing that people love their pets. There is a reason that pets are a $100B+ industry in the U.S. alone.
Unlock a World of Investing with a Magnifi Investment Account
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the February 23, 2021 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer or custodial services.
FINSUM + Magnifi: Fear rising inflation? Here’s How to Play It
(February 2021)
Inflation concerns are on the rise. The Fed has reacted with large unprecedented moves to the Covid-19 recession. The Biden administration is coming out of the gates swinging with a proposed $1.9 trillion stimulus package, that even has debt dove Larry Summers, former secretary of the Treasury for Democrat Bill Clinton, voicing fears of inflation's return. It’s not just talking heads either, the data can speak for itself. Treasury yields are on the rise and the 10-year-break even inflation rate reached a 6-year peak. Generally speaking, the banking sector is speaking to the same tune as the Fed, and given the Fed isn’t stepping off the gas pedal the SPDR regional banking ETF (KRE) is a way investors can align themselves with Fed’s zeitgeist. The regional banks are in tune with the local loan markets and are more responsive to policy than the day-to-day financial news cycle. KRE is trading at $61.83, by buying a $61 put option for $4.40 and a $65 call option for $3.90 in June, investors can bet that the Fed and the Biden administration are going to hold steadfast until they “see the whites of the eyes of inflation”.
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FINSUM + Magnifi: Top Asset Manager Makes All Funds ESG
(February 2021)
ESG has been getting more and more mainstream, and yesterday it likely took the final hurdle to major acceptance. A top asset manager with almost $1 tn in AUM announced that from here forward, all its new funds would be ESG. The manager is DWS group, which is majority owned by Deutsche Bank. According to DWS, “Sustainability is more than a corporate topic, it’s a society topic and an industry topic”. The move follows UBS’ recommendation last year that investors choose sustainable investing over traditional investing. However, according to some US financial advisors, these kind of moves will come slowly in the US. “There is too much assets tied up in old money and not enough advisor support,” says Jeff Glitterman of Glitterman Wealth Management.
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FINSUM + Magnifi: Biden Just Let Trump’s Fiduciary Rule Go Into Effect
(February 2021)
In what comes as a surprise to the entire industry, President Biden’s administration has just let the Trump-era version of the Fiduciary Rule go into effect. Almost everyone in wealth management thought Biden would surely use his administration’s powers to stop the rule’s enactment, but they elected to let it go into effect as of this Tuesday, accompanying the announcement with positive and supportive language. The industry’s reaction was immediate and positive, while consumer advocates were disappointed as they were hoping for a more stringent rule from the Democratic administration.
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FINSUM + Magnifi: Income Investors Get No Help from High Yield Bonds
(February 2021)
Two junk bond indices, Bloomberg Barclays U.S. Corporate High Yield Index and ICE BofA US High Index Yield, hit record lows both dipping to about 4%. The early stages of the pandemic were good for returns in the junk bond market, benefitting from similar bullishness in the broader stock market. The Fed’s has increased access to liquidity and with this made it easier for lower tiers of corporate bonds to access funds. Low returns in the junk bond market have pushed cautious investors into relatively appealing treasuries and riskier investors into innovative strategies. Even riskier floating rate bonds, mortgage real-estate investment trusts, and collateralized loan obligations are catching the eye of investors looking to earn a higher return.
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FINSUM + Magnifi: Surging Muni Demand Threatens Returns
(February 2021)
Municipal bond market returns remain low, but nonetheless investors seem willing to keep demanding low yield munis. This rise in demand has pushed the 10-year muni-treasury spread to -50 basis points. This comes after last March when muni’s were not only higher than the 10-year treasury but 300% of the 10-year t-bill. Part of what is driving the municipal bond market so low is a $12.5 billion dollar influx in muni mutual funds in January alone. The supply side of the market is also affecting rates as issuance slowed in the market. Munis usually provide tax relief for many investors but members of BlackRock’s municipal group said the share of taxable muni’s “remained elevated” at 29%. The group also expects these trends to continue in this segment of the bond market.
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