Good paper but a rehash of Life-Cycle Hypothesis by Franco Modigliani which i really recommend reading, implication are very powerful.
Long-term growth trends are explained by this momentum, Europe (ex-Germany) will suffer and so will Japan as boomers age. US will be fine. China will continue to boom until 2050 at which point the one-child policy will bite them in the rear end very very hard.
Say you work from 25-65, that is 40 years of earning and more importantly 40 years of saving.
In Australia the median life expectancy is 82yo. So effectively you are dis-saving for the first 25yrs then the final 17 yrs. Dis-saving period is 42 years. And this is a median too meaning half of all people will continue to live past 82yo and the gap will continue to widen.
Quite a big concern and this is where the retire later argument comes from, the economics simply don't stack up over the long-run for the average Australian especially as we all live longer.
How to leverage off this trend? I've only come up with 2 solutions.
CGS
Interesting you mention cognitive function, dementia is the second leading cause of death in Australia which when I first heard sounded insane. It will be the leading cause of death in Aus as the population ages further.
Early recognition and prevention in primary care is critical, Cogstate is the only Aus domiciled company that provides a solution in this space.
They've been working on cognition testing since '99 and have only been able to monetise recently. The majority of the work however has been with clinical trials and not primary care (GPs!).
Look at one of their most recent announcements however which states that they received FDA approval to distribute their solution to GPs.
If they pull it off, the market is absolutely massive and with large barriers to entry - 18yrs of research& FDA approval.
Fairly high-risk/high-reward but not many companies sitting at $125Mn mcaps that can go to $1Bn in 2-3 years.
Funds Management Companies
Fairly simple progression which has been done many times by decent managers (BLA, MFG, MQG, etc...)
Aging population>larger wealth base>more investable assets>domestic managers provide solution
Its one of the best and least recognised aging population plays.
Lots of financial engineering too which can prop up balance sheets at ridiculous rates. The big thing is these business can generate FUM growth and then charge performance fees which sit on intangible assets on their book.
Amazing business models, a decent fund should be 99% recurring revenue + FUM growth + performance fees.
In the space only ones that have interested me are AEF, PNI, MOE (hope people got in on the raise!).
I don't like age care centres and the whatnot, they all grow via debt or equity funded acquisitions and I'm not the biggest fan of buyout business.
That's my 2 cents on aging population and how to possibly make money, be good to hear if anyone else has any ideas and/or critiques.
(20min delay)