Forget climate change and international trade. The aging populations globally form the trend that will have the most impact on the world-wide economy during the next 30 years.
That’s the conclusion from a poll of 185 institutional investors, representing more than $10 trillion in assets. The top trend that 78% of them named, an aging populace, trumped the No. 2 trend, artificial intelligence (No. 2), climate change (No.3), urbanization (No.4), and trade (No. 5).
The survey was done by Investcorp, a provider and manager of alternative investing products. That’s fitting. One notable trend not in the poll: Alts are gaining an increasing share of the institutional dollar, as professionals seek to find an uncorrelated asset class to diversify from traditional stocks and bonds.
The institutions are more likely to bet on the baby boom generation via private markets than in public ones, with private equity and real estate their largest target areas. Perhaps this means they are interested in buying out boomer-led companies and purchasing boomers’ homes as they downsize or die. This trend, the respondents indicated, will peak in 2030 to 2032, when the oldest boomers are between ages 84 to 86 and the youngest 66 to 68.
The over-65 crowd in the US is expected to double during the next three decades, to 1.6 billion people, according to the Census Bureau. Japan is now the oldest nation and will continue to be in 2050. By region, Europe is the oldest and will stay that way over the next 30 years. Africa is the youngest, with just 3.5% of the population 65 and over.
Declining fertility rates have been the main catalyst for an aging population’s prominence on the economic scene, but birth levels vary by region and nation.