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Longevity economy strategy - March 2023

  • 11 April 2023 (5 min read)

Longevity Economy companies cautious on short-term outlook amidst macroeconomic uncertainty

  • Global equity markets declined over the month
  • The strategy outperformed the broader equity market
  • Global populations continue to age likely driving gradual but meaningful changes in consumption patterns

What’s happening?

Global equities dropped in February as macroeconomics and central bank interest rate speculation dominated sentiment.

Many companies reported quarterly earnings in February. Generally, the tone in management financial guidance was cautious and some Wall Street analysts therefore concluded many companies’ guidance was overly conservative. Only time will tell if that turns out to be true, it also seems reasonable to believe demand and input costs are less predictable than has historically been true due to the ongoing macro uncertainty.

Anecdotally, quite a few companies and sectors appear to be expecting or hoping for an improvement in financial performance to materialise in the second half of 2023. A number of Wall Street analysts have also bought into this idea. Conceptually, this perspective seems to be built on some common foundations. Firstly, there seems to be a current consensus that the peak of central bank interest rates will be more predictable as the year progresses. Secondly, many companies will begin to lap last year’s input cost inflation and foreign exchange volatility potentially making year-over-year comparable performance less difficult to beat. It’s an interesting dynamic because if everyone were to wait for the sunnier sentiment of the second half of 2023, there are a number of unknowns: where should short-term investors position themselves for the first half of the year? When will short-term investors position themselves for the second half? And, what happens if the second half is no clearer when we get there? I don’t have the answers to these questions, so I endeavour to answer a different question: which companies are going to prosper over the long-term? In my opinion that is an easier question to answer, but it doesn’t stop short-term performance diverging from long-term potential.

Portfolio positioning and performance

The longevity economy strategy outperformed the broader equity market during the month (as judged by the MSCI AC World Index). The treatment and senior care themes were more resilient, whereas the wellness theme was weaker. The silver spending theme exhibited a range of outcomes with financial planning and beauty and vision stocks weaker while leisure stocks performed more resiliently.

The strategy’s exposure to leisure stocks such Booking Holdings and Royal Caribbean contributed positively to performance.

In a continuation of the trend observed in January, not holding technology stocks, such as Apple, Microsoft and Meta Platforms detracted from performance, but at present we do not see a strong link between the growth drivers of these companies and the longevity economy.


Macroeconomics has dominated sentiment throughout 2022, it seems likely this will continue in 2023, but it is never exactly clear. Few, if any, market commentators predicted a global pandemic in the 2020 preview reports they published in 2019. What is fairly clear is investors are continuing to react negatively to economic data that increases the expected peak in central bank interest rates. It is reasonable to expect that increases in expectations for “risk-free” rates will increase the return investors demand from higher risk securities, such as equities. However, we are also cognisant that, historically, it has made sense to invest in equities after each major market decline, so we would likely perceive declines in markets as buying opportunities. Short-term macroeconomic trends are not reliably predictable, but we believe in the long-term power of longevity and ageing populations to drive changes in consumption patterns.

The longevity economy strategy is tilted towards growth companies and we expect this to be beneficial over the long-term, but it does mean the strategy could lag the broader market during periods of volatility or when growth stocks are not favoured by investors. Similarly, the strategy is not significantly exposed to information technology stocks, which can present a headwind when this sector outperforms the broader market.

Despite the market volatility, global populations continue to age likely driving gradual but meaningful changes in consumption patterns.

After the period under review, significant volatility has been observed in US regional banks, we continue to monitor this closely as it impacts some companies exposed to the longevity economy.

Examples are provided for informational purposes only and  should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalised recommendation to buy or sell securities.

No assurance can be given that the Longevity Economy Strategy will be successful. Investors can lose some or all of their capital invested. The Longevity Economy Strategy is subject to risks including: Equity; Currency; Global Investments; Emerging markets; Investments in small capitalisation universe and Investment in specific asset classes.

Investment strategies


Our latest views on equity markets and what is driving them.

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