The Giant Market Opportunities Investors Are Overlooking

Jennifer Pryce

Jennifer Pryce examines the reasons why impact investors have yet to tap into the opportunities that global aging presents, and outlines three steps to channel capital into potential markets that impeding demographic changes will entail.

What if I told you that one of the largest megatrends in the world today—representing a market opportunity worth trillions of dollars—is being overlooked by investors? And that as a result, there are almost no products being developed to take advantage of this potential to earn an outsized financial return and generate significant social benefit?

Well, this situation isn’t hypothetical, the market opportunity is real and it is the need for products, services, and programs to support aging populations around the world. By 2040 the global 65+ population will double what it is today, reaching 1.3 billion with two-thirds of seniors around the world living in emerging market economies.[1] While business and the media tend to focus on millennials (18-34 year olds), individuals aged 55+ spend twice as much as millennials, and by 2020, their spending power will reach $20 trillion.[2] 

Despite what seems to be an obvious opportunity, few investment solutions arising to address it and this is a problem. The changes that result from a global aging populace will be transformative on every level of society and to almost every industry.

Impact Investing’s One-Sided Interest

The industry I work in, impact investing, defined as investing for an intentional and measurable financial, social and environmental return,[3] is well-positioned to play a role in addressing the opportunities and challenges presented by aging populations. While impact investors are quite conscious of the coming demographic changes as it relates to their ability to raise money—roughly $30 trillion dollars is scheduled to transfer from baby boomers to millennials over the next several decades[4]—their interest has not extended to opportunities to place capital that those same demographic changes represent. 

This is a serious oversight given the size of the market and the potential for social impact: in the U.S. alone more than 25 million seniors live below the poverty line and one in six faces isolation.[5]

Need for Adequate Frameworks

Why has impact investing ignored this as an investment opportunity? In part because aging hasn’t been incorporated into frameworks that help guide the industry. The United Nation’s Sustainable Development Goals (SDGs), a set of shared goals meant to coordinate efforts from public, private and philanthropic sectors to “end poverty, protect the planet, and ensure prosperity for all”[6] help establish the agenda for the major issues that deserve our concern and collaboration as a global community. Impact investors are aligning with the SDGs to organize their portfolios, communicate their impact and attract investors.

There are seventeen SDGs but aging, a truly universal condition and soon to be a nearly universal challenge, isn’t mentioned.

Overcoming Biases

On a more basic level, aging populations are often not thought of as worthy investment opportunities. This stems from biases against their shorter lifespans and fixed incomes, as well a culture that tends to worship youth and overlook the elderly. 

Again, impact investors are well-suited to play a role here as they have routinely proven that markets dismissed by mainstream investors can, in fact, be great opportunities. For example, today microfinance, the provision of small loans to low-income entrepreneurs, is a robust commercial market and yet even as recently as fifteen years ago it was not perceived as a feasible investment opportunity. Successful impact investors in microfinance helped debunk the myth that one cannot invest in the poor.

Compounding the problems outlined above is the nature of the coming demographic changes. They will be massive, but also gradual and unprecedented. To respond to changing market needs, we’ll need new models for capturing and assessing opportunities. Whereas mainstream capital market actors tend to be less nimble and focused on short-term results, impact investors have a mandate to innovate and address long-term challenges.

So where can we, as impact investors, go from here? I suggest we start by doing three things:

  1. Acknowledge the problem and start talking about it; whether you are managing a fund or talking to your financial advisor, make it a priority to find out how demographic shifts may affect your portfolio and how you are—or aren’t—addressing issues related to aging populations.
  2. Incorporate addressing needs of aging populations into shared industry frameworks—it’s the frameworks we set today that direct the resources tomorrow. Industry groups like The GIIN (Global Impact Investing Network) should incorporate aging as a key topic for their work, and perhaps it’s time to consider an 18th SDG to address aging.
  3. Invest by seeking out opportunities to support entrepreneurs, intermediaries, and funds that are tackling aging issues in ambitious ways. From reinventing in-home care to increasing access to healthy foods, there are many ways incorporate aging into your portfolio.

Impact investors have always found opportunities in challenges—it’s time for us all to start thinking about older people in new ways.

[1] PGIM, A Silver Lining: the Investing Implications of an Aging World,Prudential Financial, Inc., 2016. Accessed 8/7/2017.

[2] Richard Eisenberg, “How to Make Money from the Global Aging Trend,” Forbes, May 9, 2016. Accessed 8/7/17. 

[3] The GIIN, “What you need to know about impact investing.” Accessed 8/7/17. 

[4] Wealth and Asset Management Services, The Greater Wealth Transfer: Capitalizing on the Intergenerational Shift in Wealth, Accenture, 2015. Accessed 8/7/17. 

[5] National Council on Aging, Economic Security for Seniors Facts. Accessed 8/7/17. 

[6] The United Nations, Sustainable Development Goals: 17 Goals to Transform Our World. Accessed 8/7/17.  

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Written By:

Jennifer Pryce

President and CEO, Calvert Impact Capital