The growing wealth and increased spending power of the over-50s is set to accelerate a range of investment opportunities across multiple sectors in the UK, according to investors.
Market professionals say this age group – nicknamed the “gray pound” or “money spenders” – is gaining greater control over their assets. With greater wealth and more discretionary income, more of this demographic is increasingly considered the new “idle rich.”
Dan Coatsworth, head of markets at AJ Bell, said the over-50s were an increasingly influential demographic in the consumer sector.
“Those who are still working may be well into their careers, have paid off their mortgage and have plenty of disposable cash. They may have worked hard for decades and feel like they deserve to spend the money,” Coatsworth told CNBC.
“Retirees could be part of the generation that benefited from generous defined benefit pension plans and collected a tidy sum to fund an extravagant lifestyle,” he added.
Coatsworth said the group wanted to protect as much of its wealth from tax as possible, which meant seeking advice on taxes, investments and general financial planning.
Compound assets
Alyx Wood, co-founder and chief investment officer at Kernow Asset Management, said there was a clear subset of winners and losers within this cohort.
Daily life for “many” of them is still “quite difficult and normal,” but there are others who “are simply managing to capitalize on their assets,” he said.
This latter, more affluent segment is developing an appetite for luxury products “they’ve never had before,” as well as “high-end” wealth management and insurance services.
These customers are increasingly looking for “content, story, engagement, purpose” that goes beyond traditional passive feedback, Wood added.
Hiscox.
He highlighted names like the insurance group Hiscox and private wealth managers Evelyn Partners as potential winners as older consumers shift to certain premium wealth management and insurance products.
“Banks are trying to buy up the wealth management industry,” Wood said, noting interest in Evelyn Partners from NatWest Group And Barclays as private equity owners Permira and Warburg Pincus look to exit. “I hope you see some of them.”
Wood, a contrarian stock picker whose hedge fund specializes in British stocks, took a major position in Saga plc last month at Sohn’s annual investment conference in London, which he said was also partly a bet on the strength of the “silver pound.”
He said people living out their “Saga years”, a reference to the travel and insurance brand which focuses on the over-50s, will account for around 60% of all UK consumer spending by 2030.
Saga – which represents about 10% of Kernow’s portfolio – is a “significantly undervalued” company, whose share price could rise more than 400% over the next few years, Wood added.
“The list is long”
Wood said that Pets at homethe London-listed specialist retailer of pet food, toys and accessories, was another name facing near-term pressures that could ultimately become a beneficiary of the trend, as older consumers buy more for their pets and spend less on their children.
“Material experiences and goods will be high on their list of places to spend money – like vacations, nice meals, luxury cars, home renovations, beauty products, wellness,” Coatsworth said of the cohort. “The list is long.”
Pets at home.
Coatsworth also said the healthcare sector was likely a winner, as an aging population would lead to increasing demand for drugs and treatments.
“Private nursing homes, retirement villages and real estate investors with medical providers as tenants are among the winners from this trend,” Coatsworth told CNBC via email.
Source | domain www.cnbc.com
