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ETF proxies for the silver economy

Lewis Lim
Lewis Lim5/21/2018 07:30 AM GMT+08  • 8 min read
ETF proxies for the silver economy
SINGAPORE (May 21): In our Market Watch article titled “The ­silver economy: Ageing in the digital age” last week (Issue 830, May 14), we explored the emergence of the silver economy and the possible proxies to ride the ageing trend. Although the mac
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SINGAPORE (May 21): In our Market Watch article titled “The ­silver economy: Ageing in the digital age” last week (Issue 830, May 14), we explored the emergence of the silver economy and the possible proxies to ride the ageing trend. Although the macro outlook is favourable to these stocks, stock selection still essentially depends on the competitive strength, financial merits and execution capability of the individual companies. If investors want to invest in this megatrend, but prefer sector exposure rather than individual stocks, there are several exchange-traded fund (ETF) choices that fit the investment thesis for this sector.

The ETFs are focused on different parts of the silver economy value chain. They include ETFs directly linked to aged care, senior living and spending — including on necessities and discretionary items such as cruises and travel. We have also included biotechnology and healthcare ETFs.

Among the ETFs identified in the healthcare spectrum, iShares Nasdaq Biotechnology ETF (IBB:US) is the biggest in terms of fund size at US$11 billion ($14.7 billion). It tracks the performance of the Nasdaq Biotechnology Index. Defying conventional wisdom that ETFs provide diversification and lower risk, this ETF has a high beta. Its three-year volatility reading is 23.72%.

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