New tech and ageing populations shaping investment strategies

More than half (60 percent) of investors see demographic change, such as an aging population and the emergence of younger investors, as an opportunity.

BNP Paribas’ latest survey of 135 institutional investors and brokers in Europe, Asia and the US sought to understand investors’ perspectives on demographic change.

It revealed that only 20 percent see demographic change as a risk.

Investors see new technology (95 percent) and an aging population (91 percent) as the most important changes shaping their investment strategies.

This was followed by 86 per cent of investors citing population growth in emerging markets.

BNP Paribas CEO Sandro Pierri said the survey results show the intertwined relationship between changing demographics, asset allocation considerations and the “increasingly accelerating” pace of technology and focus on sustainability. .

In Pierri’s view, a fundamental reallocation of capital is required.

“This will require a profound transformation in the investment industry to address issues such as financing the pension gap, moving from wealth creation to wealth preservation tailored to clients’ risk profiles, or providing a more digital way to invest.

“While this presents challenges, it also creates new opportunities. Identifying the established sectors to solve these challenges and selecting the appropriate strategies can uncover long-term investment opportunities,” said Pierri, adding that BNP Paribas is already seeing a shift towards thematic investing.

Pierri attributes this shift to clients looking to address specific challenges and take advantage of longer-term trends.

“As a result, there was a mix of preferences to take on more and less investment risk going forward,” Pierri said.

Investor preference in Asia was for lower investment risk (39 percent), compared to higher investment risk expected in the US and Europe (both 17 percent).

By region, US investors said demographic change had the least impact on their asset allocation.

About 42 percent of US investors indicated that demographic change has already affected asset allocation, compared to 78 percent of those in Europe and 83 percent in Asia.

The impact was more pronounced among intermediary investors, with 86 percent indicating that it had already been considered in investment options, compared to 69 percent of institutional investors.

Asset classes most likely to benefit

Health care and technology were seen as the sectors most likely to benefit from these changes.

Health care was seen as the most important investment topic for clients, with 91 percent citing it as significantly attractive.

It was followed by technology (84%), energy (67%), agri-food (63%), leisure and tourism (60%) and real estate (59%).

BNP Paribas said that the growing appeal of health care and technology is related to the pandemic and climate change.

For institutional investors, equities (52%), real estate (50%) and infrastructure (47%) were considered the asset classes most likely to benefit from allocations as a result of demographic change.

Meanwhile, for intermediary investors, thematic investment was higher at 63%, followed by equities (53%) and infrastructure (47%).

Leave a Comment