Key facts
- A portfolio of 10 UK-listed companies catering to retirees has risen 18% year-to-date.
- This 'OAP ETF' has outperformed the Nasdaq 100 (up 14%) and FTSE 350 (up 9%).
- Key companies in the portfolio include Saga, Target Healthcare REIT, Legal & General, and Smith & Nephew.
- Demographic trends show a projected doubling of the 85+ population in the UK by 2049.
- Retirees' consistent spending provides a stable cash flow for businesses serving them.
A curated basket of 10 London-listed companies that cater to the retirement market, informally dubbed the 'OAP ETF', has significantly outperformed major stock indices this year. The portfolio has seen an 18% increase since January, surpassing the Nasdaq 100's 14% gain and the FTSE 350's 9% rise.
Companies within this 'OAP ETF' include cruise operator Saga, care home owner Target Healthcare REIT, financial services firm Legal & General, and medical device manufacturer Smith & Nephew. The strong performance is attributed to the substantial wealth held by the baby boomer generation and favorable demographic trends, with the over-85 population in the UK projected to double by 2049.
AJ Bell investment director Russ Mould highlighted that businesses serving retirees benefit from reliable and consistent spending, which offers a solid cash flow. He contrasted this with the financial pressures faced by younger generations, such as student loan repayments and saving for housing. Mould also noted a recent investor reappraisal of sectors perceived as less predictable, like AI, in favor of more stable income streams.