Market Health

The Most Profitable Sector for 2020 Is Minting 100-Year-Olds

My father never dreamed he’d live past 62.

And I’ll admit, the way he lived, it’s somewhat of a surprise that he did.

He used to tell me that when he was growing up in the late 1930s and ‘40s, it seemed unfathomable to live to see 70 or 80 years of age. The life expectancy for a male in 1940 was a mere 60.8 years.

Today, it’s 78.6 years.

But here’s where it gets interesting…

A recent study by AIG Life & Retirement found that more than half of Americans plan to live to 100. I know I do, and I’m sure some of you reading this will make it to that milestone.

Better nutrition, better treatments and overall better healthcare have made joining the centenarian club a lot easier than it used to be.

And the hottest sector for 2020 isn’t just making the dream of a country full of 100-year-olds a possibility, it’s also the sector projected to see the biggest profit increases.

In 2019, the iShares U.S. Healthcare ETF (NYSE: IYH) gained roughly 21%. That wasn’t a terrible performance, though it did lag the broader market gains.

Now that we’re in 2020, healthcare has a major tailwind at its back in the form of profits.

Chart - S&P Sectors by 2020 Projections

Wall Street is expecting the sector to see earnings per share increase 25.5% in the year ahead. That’s more than double the projected 11% increase of the S&P 500 and considerably more than the 15.8% expected growth from last year’s big winner, information technology.

Even better, healthcare is an outperformer during periods of economic weakness. So the sector can provide a cushion in the event of a recession or downturn.

Lastly, the best reason to make room for healthcare in your long-haul portfolio is the world’s aging population.

People over the age of 65 make up the fastest-growing age group worldwide. And by 2050, it’s estimated that 1 out of every 6 people will be 65 or older (myself included).

In Europe and North America, the percentage will be even higher, closer to 25%.

Today, there are roughly 92,000 centenarians in the U.S. By 2050, there will be more than 500,000.

That’s why healthcare will be the hottest sector for 2020 and beyond.

Here’s to high returns,

Matthew