Special Feature

Special Report on Retirement 2017

In this special feature: keeping clients calm; downsizing the family home; getting the most from spousal RRSPs and much more from the Mid-November 2017 issue of Investment Executive.

By Dwarka Lakhan | Mid-November 2017

As the percentage of people over age 65 continues to swell to all-time highs, investment opportunities in a broad range of sectors that focus on older consumers - including travel, drugs, health care, long-term care and financial services - will potentially benefit.

Health care stands out among the sectors that will benefit from an aging demographic, says Phil Taller, senior vice president and portfolio manager with the Mackenzie Investments growth team at Mackenzie Financial Corp. in Toronto.

Taller's portfolios invest in several firms that are among the global leaders in the drug supply/therapy chain, including in research and development, trials and testing. These picks include:

- Bio-Techne Corp. of Minneapolis, whose key business is the supply of highly specialized proteins and antibodies for pharmaceutical research.

- Charles River Labs Inc. of Wilmington, Mass., which provides pre-clinical and clinical laboratory services for the pharmaceutical, medical device and biotechnology industries to help expedite the discovery, early-stage development and safe manufacture of novel drugs and therapeutics.

- INC Research Holdings Inc. of Raleigh, N.C., which is one of the largest biopharmaceutical research outsourcing providers in the world.

Jeff Elliott, vice president, portfolio management, and portfolio manager with Signature Global Asset Management, a division of CI Investments Inc., also likes health care. Among his picks in this sector are:

- Celgene Corp. of Summit, N.J., a biotechnology company that discovers, develops and commercializes medicines for cancer and inflammatory disorders. Elliott says the company has multiple pipelines for new products.

- UnitedHealth Group Inc. of Minnetonka, Minn., one of the largest providers of health insurers for people who are 65 years of age or older and younger clients who qualify because of a disability.

Paul Moroz, deputy chief investment officer (CIO), director and portfolio manager with Mawer Investment Management Ltd.'s global equities team in Calgary, says that if you take a thematic approach to investing in stocks that will benefit from an aging population, "it sounds good to invest in certain stocks from a top-down perspective." However, he cautions: "From a bottom-up perspective, it's hard to make money."

Moroz also favours health care. Stocks he likes include:

- Johnson & Johnson of New Brunswick, N.J., one of the largest drug firms in the U.S., which manufactures several products targeting the older population.

- Novartis International AG, a Switzerland-based pharmaceutical company that manufactures lower-cost generic medications.

- Roche Holdings AG, a Switzerland-based biotech and lab diagnostics giant, which is developing oncology drugs.

- Tsuruha Holdings Inc., a Japan-based firm that operates a series of drugstores and is benefiting from expanding market share due to the aging demographic.

Companies that provide wealth management to older clients also are likely to prosper, Moroz adds. He favours Toronto-Dominion Bank, Royal Bank of Canada and Bank of Nova Scotia.

Furthermore, Moroz notes, travel appeals to older consumers. Stocks he favours include:

- Priceline Group Inc. of Norwalk, Conn., the world's leading provider of online travel and related services.

Christine Tan, CIO and portfolio manager with Excel Investment Counsel Inc. says there's a growing trend for travel among the older Chinese population. Among her favourites are:

- TravelSky Technology Ltd. of Beijing, the dominant provider of information-technology services for China's aviation and travel industry; the firm also operates an internet travel platform.

Tan also believes Asia-based insurance companies are likely to grow. Among them is:

- AIA Group Ltd. of Hong Kong, which is the largest independent publicly listed pan-Asian life insurance group.

© 2017 Investment Executive. All rights reserved.