Warning: members of the public are being contacted by people claiming to work for AXA Investment Managers UK Limited.  Find out more information and what to do by clicking here.

Longevity Economy strategy: Strategy experienced mixed performance as uncertainty remains over full easing of restrictions

  • 08 March 2021 (3 min read)

Key points

  • Continued vaccine rollout provides reason for optimism, but it remains difficult to determine when social distancing can be fully eased globally
  • Strong performance came from Silver Spending holdings, while weaker performance was delivered by a number of Wellness names
  • Focus remains on long-term changes brought about by ageing populations

What’s happening?

In February, stocks perceived as having benefitted from increased demand during the COVID-19 pandemic fell, while we saw a rise in stock prices of companies expected to benefit from resurgent demand as economies reopen. For example, many of the companies at the forefront of COVID-19 testing fell, whereas many travel and leisure stocks rose.

COVID-19 continues to dominate headlines. The emergence of new, more transmissible and possibly more deadly variants of COVID-19 makes it harder to predict when social distancing measures can be fully relaxed globally. However, it is reasonable to expect mortality rates to fall as vaccination programs start to offer protection to high risk groups. Preliminary evidence suggests the currently authorised vaccines provide protection against the most prevalent of the emerging variants of COVID-19, which offers reason for optimism.

Portfolio positioning and performance

The Longevity Economy strategy underperformed its reference benchmark in February as strong performance by many of the strategy’s silver spending holdings was exceeded by underperformance in a number of wellness holdings.

Our silver spending theme identifies that an individual’s personal spending often doesn’t peak until their later years. While many of us expect to retire at the same age as our forebears, we generally reach retirement feeling younger and fitter in ourselves. As such, there is clearly a difference between our chronological age and the actual age we feel (our biological age). Given our increased vitality at older ages, it is unsurprising people want to travel and experience what they didn’t have time to do during their working lives. Royal Caribbean Cruises is an example of a company that plays into this theme, demand for cruises was outstripping supply prior to the COVID-19 pandemic and as investors perceive an end to the worst of the pandemic, it is no surprise that the share price has rebounded strongly, up more than 40% in February alone.

In contrast, investors appear to be more cautious on companies that have benefitted from increased demand during the pandemic. For example, share prices for companies providing the tests and instruments for COVID-19 testing have been more volatile recently. However, in the short term we may see a reduction in demand but given the larger installed base of instruments driven by the pandemic, it is reasonable to expect an increase in long-term demand for testing of other diseases as many of these testing machines are highly versatile.

Given the strong performance of a number of holdings exposed to the treatment and wellness themes, we selectively closed some positions, including Genmab and Insulet, while adding to positions where valuation appears low relative to peers, such as adding Tandem Diabetes.


The beginning of mass vaccination programs against COVID-19 increased optimism that social distancing measures may soon be relaxed in multiple regions. However, the emergence of more transmissible variants somewhat tempered these expectations. Undoubtedly asset prices have been supported by unprecedented fiscal stimulus from governments in major economies. The stimulus has dwarfed the stimulus provided in the aftermath of the Global Financial Crisis. While this has supported many people and businesses who would have faced insolvency without financial support, it is likely that the debt raised to fund these measures will entail higher taxes over the long-term, which could subdue long-term economic potential.

Investors appear to be looking towards a return to normality in economic activity, but governments across multiple regions continue to take expansionary fiscal measures, suggesting they do not perceive the economic fallout of the pandemic has passed completely. For example, in the US, President Biden and Democrats are pursuing a large stimulus package, time will tell if additional fiscal measures can be agreed by Congress given the Democrats narrow working majorities in both chambers.

Stepping back from macroeconomic considerations, we retain the view that high quality management teams, operating businesses with a sustainable competitive advantage and with the benefit of secular tailwinds are well-placed to navigate the current disruption. Despite the headwinds many businesses have faced over the last 12 months, the unshakeable conclusion on the outlook for the Longevity Economy is that the global population continues to age and this creates opportunities for companies that are positioned to benefit from long-term changes in consumption patterns that ageing populations will bring.

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.

    Not for Retail distribution

    This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.

    This promotional communication does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee that forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    Before making an investment, investors should read the relevant Prospectus and the Key Investor Information Document / scheme documents, which provide full product details including investment charges and risks. The information contained herein is not a substitute for those documents or for professional external advice.

    The products or strategies discussed in this document may not be registered nor available in your jurisdiction. Please check the countries of registration with the asset manager, or on the web site https://www.axa-im.com/en/registration-map, where a fund registration map is available. In particular units of the funds may not be offered, sold or delivered to U.S. Persons within the meaning of Regulation S of the U.S. Securities Act of 1933. The tax treatment relating to the holding, acquisition or disposal of shares or units in the fund depends on each investor’s tax status or treatment and may be subject to change. Any potential investor is strongly encouraged to seek advice from its own tax advisors.

    Past performance is not a guide to current or future performance, and any performance or return data displayed does not take into account commissions and costs incurred when issuing or redeeming units. The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. Exchange-rate fluctuations may also affect the value of their investment. Due to this and the initial charge that is usually made, an investment is not usually suitable as a short term holding.

    Risk Warning

    The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. 

    Are you an IFA or other Professional Investor ?

    Are you a financial advisor, institutional, or other professional investor?

    This section is for professional investors only. You need to confirm that you have the required investment knowledge and experience to view this content. This includes understanding the risks associated with investment products, and any other required qualifications according to the rules of your jurisdiction.