19/09/2013 - Some thoughts about the rise in longevity
We are living longer, a phenomenon that brings major changes to our lives and financial market fundamentals.
Some thoughts about the rise in longevity
By Michaël Bret, Head of Thematic Research, AXA Investment Managers
Download our Investment Essentials - Some thoughts about the rise in longevity 19/09/2013 536 KB PDF
With each passing day, our life expectancy increases by more than 5 hours. Michael Bret investigates how markets can be impactedacross different countries, whereageing results in either substantial desinflation or high inflation. The consequences for long-term pension fundsare significant. Matching growing short-term liabilities in a low-yielding environment rattles ALM strategies, while ageing in a given country potentially impacts markets globally.
- Longevity is increasing at a pace difficult to apprehend: in many countries, half of the babies born today could live 100+ years. Each day we live, we currently gain 5 more hours of life expectancy.
- This raises many economic and financial questions that we highlight in this first piece and will investigate further in future reports.
- Longevity used to create disinflationary pressures in the past, but could on the contrary fuel high inflation in the future because of fiscal unsustainability.
- ALM strategies face a growing duration mismatch: longer retirement years for baby boomers is sparking a hunt for yields. This can take various forms: international diversification or higher exposure to equities and alternative assets.
- Financial assets will be globally impacted in a world of free moving capital.
View other AXA IM publications
Investment Essentials by Michaël Bret 19/09/2013 536 KB PDF