The issue of demographic change is attracting greater attention nowadays, as the UK population ages and the implications for public policymaking come to the fore. It’s a global issue with influence that stretches beyond national boundaries and across the public and private sectors. That means even investors who devote their time and energies in pursuing the ‘value’ mantra would be well advised to consider demographic trends when building or redefining their portfolios.
Economically speaking, the consensus is already in. A general viewpoint has emerged over the impact of a ‘greying’ population on economic productivity, and it isn't positive. But the danger always exists that any orthodox position may be grounded in flawed logic or overly reliant on untested assumptions. And even if current thinking about demographics' impact economic growth stands up to critical examination, it doesn’t automatically follow that it will also have a profound impact on future stock market valuations. In this regard, there are reasons to think demographics may not be as deterministic as some believe.