How demographics impact asset allocations

BNP Paribas Asset Management reveals the key findings of its latest survey conducted by Coalition Greenwich on how demographic change has and continues to impact asset allocation decisions.

• 74% of respondents indicated that demographic change has already impacted asset allocation decisions.
• 95% cited new technologies as an important change shaping their investment strategies, closely followed by ageing populations (91%).
• 60% of investors viewed demographic change as an investment opportunity.

The survey found that demographic change has impacted asset allocation decisions for three-quarters (74%) of investors in the past three years and almost all (95%) believe it will have a greater influence on investment decision-making in the next decade.  By region, 42% of US investors indicated demographic change has already impacted asset allocation, compared to 78% of those in Europe and 83% in Asia.  The impact was most pronounced amongst intermediary investors, with 86% indicating it had already been factored into investment choices, compared with 69% of institutional investors.

Main demographic and societal changes set to impact investment strategies

Almost all investors surveyed (95%) cited the acceleration of digital and new technologies as an important change shaping their investment strategies, closely followed by the impact of ageing populations (91%), changes in consumer spending habits (89%) and population growth in emerging markets (86%).

These findings also reflect the more appealing sectors identified by respondents.  Healthcare was identified by almost all investors (91%) as significantly attractive, followed by Technology (84%), Energy (67%), Agrifood (63%), Leisure & Tourism (60%) and Real Estate (59%).  Their growing attractiveness is also linked to the pandemic and climate change.

Key regional differences:

• Healthcare was seen as more important in Europe and Asia (both 95%) compared to the US (75%).
• Technology, telecoms and IT were more important in Asia (93%) compared to Europe (81%) and the US (75%).
• For investors in Asia, emerging market population growth was deemed an ‘extremely important’ aspect of demographic change for investment strategy by half of respondents (51%), compared to 21% in Europe and 15% in the US.
• Diversity & Equality was deemed to be an ‘extremely important’ aspect by 30% of US investors, compared to 24% in Asia and 17% in Europe.