Wealthy ‘Silver Spenders’ are now driving investment opportunities
The growing wealth and growing spending power of the over-50s is set to accelerate a range of investment opportunities across many sectors in the UK, according to investors.
Market experts say this age group, called the “Grey Pound” or “Silver Spenders”, has greater control over their assets. With greater wealth and more discretionary income, a larger portion of this demographic is increasingly viewed as the new “idle rich.”
Dan Coatsworth, market manager at AJ Bell, said over-50s were becoming an increasingly influential demographic group in the consumer space.
“Those still working may be well advanced in their careers, may have paid off their mortgage, and have a lot of disposable money. They may have worked hard for decades and feel they deserve to splash the cash,” Coatsworth told CNBC.
“Retirees may be from the generation that receives generous defined benefit pension schemes and collects a tidy sum to fund an extravagant lifestyle,” he added.
Coatsworth said the group wanted to protect as much of their wealth as possible from tax, which meant seeking advice on tax, investments and general financial planning.
Merger of assets
There is a clear subset of winners and losers in this group, said Alyx Wood, co-founder and chief investment officer of Kernow Asset Management.
“For many,” he said, their daily lives are still “pretty difficult and normal,” but there are others who “are definitely making it in terms of combining their assets.”
This latter wealthier segment is developing an appetite for “high-end” wealth management and insurance services, as well as luxury goods they have “never had before.”
Wood added that these customers are increasingly looking for “content, story, engagement and purpose” that go beyond traditional passive returns.
Hiscox.
He highlighted names such as insurance group hiscox and privately held asset managers Evelyn Partners are seen as potential winners as older consumers turn to certain premium wealth management and insurance products.
“Banks are trying to buy back the asset management industry,” Wood said, pointing to interest in Evelyn Partners. NatWest Group And Barclays While private equity owners Permira and Warburg Pincus are trying to exit. “I think you’ll see a few of these.”
Wood, a contrarian stock picker whose hedge fund specializes in UK equities, outlined a significant position in Saga plc at the annual Sohn London investment conference last month, saying it was also partly a bet on the strength of the “Silver Pound”.
People living their “Saga years” will account for around 60% of all consumer spending in the UK by 2030, he said, referring to the travel and insurance brand focused on over-50s.
Saga, which makes up about 10% of Kernow’s portfolio, is a “materially undervalued” business and its share price could rise by more than 400% in the next few years, Wood added.
‘The list goes on and on’
Wood said this Pets at HomeThe London-listed specialist retailer of pet food, toys and accessories was another name facing pressure that could benefit from the trend in the short term, as older consumers buy more for their pets and spend less on their children.
“Experiences and material goods will be high on the list of places to spend money, including holidays, fine dining, luxury cars, home improvements, beauty products, healthy living,” Coatsworth said of the group. “The list goes on and on.”
Pets at Home.
Coatsworth also said the healthcare sector was likely to be a winner as an aging population meant increased demand for medicines and treatments.
“Investors of private care homes, nursing homes and property with medical providers as tenants are among the winners of this trend,” Coatsworth told CNBC via email.
