Wealthy ‘Silver Spenders’ are now driving investment opportunities

The growing wealth and enhanced spending power of the over-50s is poised to accelerate a range of investment opportunities across multiple sectors in the U.K., according to investors.

Market pros say this age group — dubbed the “Grey Pound” or “Silver Spenders” — is gaining greater control over its assets. With greater wealth and more discretionary income, a larger chunk of this demographic is increasingly seen as the new “idle rich.”

Dan Coatsworth, head of markets at AJ Bell, said that the over-50s were an increasingly influential demographic within the consumer space.

“Those still working might be well advanced in their career, paid off their mortgage, and have lots of disposable cash. They might have worked hard for decades and feel like they deserve to splash the cash,” Coatsworth told CNBC.

“Those in retirement might be in the generation that received generous defined benefit pension schemes and collect a tidy sum to fund an extravagant lifestyle,” he added.

Coatsworth said the group wants to protect as much of their wealth as they can from taxation, which means seeking advice on tax, investments, and general financial planning.

Alyx Wood, co-founder and chief investment officer at Kernow Asset Management, said there was a clear subset of winners and losers within this cohort.

Day-to-day life for “a lot of” them is still “quite tough and normal,” but there are others who are “just absolutely nailing it in terms of compounding their assets,” he said.

This latter wealthier segment is developing an appetite for luxury goods “that they’ve never had before,” as well as for “higher-end” wealth management and insurance services.

These customers are increasingly seeking out “content, story, getting involved, a purpose” that extends beyond traditional passive returns, Wood added.

He highlighted names like insurance group Hiscox and privately-owned wealth managers Evelyn Partners as potential winners as older consumers turn to certain premium wealth management and insurance products.

“The banks are trying to buy back into the wealth management industry,” said Wood, pointing to the reported interest in Evelyn Partners from NatWest Group and Barclays as private equity owners Permira and Warburg Pincus seek to exit. “I expect you’ll see a few of those.”

Wood, a contrarian stock picker whose hedge fund specializes in U.K. equities, last month outlined a major position on Saga plc at the annual Sohn London investment conference, which he said was also partly a wager on the strength of the “Silver Pound.”

He said people living their “Saga years,” a reference to the travel and insurance brand that focuses on the over-50s, will account for about 60% of all U.K. consumer spending by 2030.

Saga — which makes up about 10% of Kernow’s portfolio — is a “materially undervalued” business, whose share price could surge over 400% in the next few years, Wood added.

Wood said that Pets At Home, the London-listed specialist retailer of pet food, toys, and accessories, was another name facing near-term pressures that could ultimately emerge as a beneficiary of the trend, as older consumers buy more for their pets and spend less on their children.

“Experiences and material goods will rank highly on their list of places to spend money – such as holidays, nice meals, fancy cars, home renovations, beauty products, wellness,” Coatsworth said of the cohort. “The list goes on.”

Coatsworth also said that the healthcare sector was a likely winner, as an ageing population will mean rising demand for medicine and treatment.

“Private care homes, retirement villages and property investors with medical providers as tenants are among the winners from this trend,” Coatsworth told CNBC via email.