NETHERLANDS - The ageing of the population in Europe will probably lead to lower demand for equities and a higher appetite for bonds, says Dutch research institute Iris.

According to Iris – an independent subsidiary of Rabobank and its asset management arm Robeco – young people prefer to invest in equities. Older investors tend to avoid risk, and will more often choose bonds. They save more during their working life, and eat into their savings after retirement, it said.

Iris found that in many countries the cash flow of pension funds would turn from positive to negative between 2015 and 2020. “This is unfavourable for the supply-and-demand ratio,” it explained.

Given the effects of ageing on society and the economy, funds within the healthcare sector and financial services will offer opportunities for long-term investors, the institute said.

On its list is also the pharmaceutical industry, e.g. with players like Sanofi-Aventis and Novartis in particular and, for example, ING’s Biotechnology fund and Fidelity Healthcare Fund.

Within the financial sector, Iris has identified commercial pensions providers and life insurers as investment targets within the context of ageing. ING and the UK insurers Aviva and Prudential are promising, it said. The same goes for private bankers, like UBS and Van Lanschot.

In Iris’ opinion, the effects of ageing for the Netherlands aren’t bad. “The build-up of private pensions is excellent. And because of a relatively low national debt and a positive trade balance, Holland has more buffers than most other countries,” it concludes.

The Netherlands however scores badly on the participation of older workers and the level of pensions.

Italy has the biggest ageing problem, due to a very low birth rate, a low participation of older workers, high pensions and hardly any build-up of private pensions, the Iris researchers noted.

“Moreover, Italy’s national debt is high and its trade balance is negative. Both will worsen because of ageing.”

Of the developed countries, the US will be the least affected by ageing, Iris said.

Iris focuses on supporting services to private investors at Rabobank and Robeco. Its core activities are independent investment research and advice and information management.

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