Aging populations and advances in technology influencing investment strategies

Changing demographics are having a significant impact on asset allocation, latest research by BNP Paribas Asset Management (BNPP AM) shows.
The asset manager’s survey – conducted in association with Coalition Greenwich – questioned 135 institutional and intermediary investors across Europe, Asia and the US.

The findings revealed just under four-fifths (78%) of European investors believe that changing demographics factors had already had an impact on asset allocation, along with 83% of Asian investors. In contrast, only 42% of US investors believed this to be the case.

The survey found that 86% of intermediary investors had already factored such factors into investment choices compared to just 69% of institutional investors.

BNPP AM’s research also revealed that, among institutional investors, 52% believed that equities was the asset class most likely to gain from the changes to asset allocations caused by the demographic changes, closely followed by real estate (50%), and infrastructure (47%).

In total, three-fifths of the total respondents revealed that they saw demographic changes as an investment opportunity, compared to one-fifth who saw them as risks.

BNPP AM chief executive Sandro Pierri said: “The results of the survey highlight the significance of demographic changes and societal changes, and their investment implications.

“The findings also show the extent to which demographic shifts and asset allocation considerations are interlinked with the ever-quickening pace of technology and the focus on sustainability, which requires a fundamental re-allocation of capital.

“This will need deep transformation in the investment industry to cater for issues such as funding the pension gap, moving from wealth creation to wealth preservation adapted to clients’ risk profiles or providing for a more digital way of investing.

“While this presents challenges, it also creates opportunities. Identifying the sectors set to solve these challenges and selecting the appropriate strategies can uncover long-term investment opportunities.”

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