Next Generation Defensives: Low-Beta-Beneficiaries Of A Changing World Until 2050

Executive Summary

The Next Generation Defensives Index offers a low-beta investment alternative for investors to tilt their portfolios towards a more defensive stance – whilst simultaneously profiting from highly relevant long-term trends. In this white paper, we want to look at major changes until 2050 – how society will evolve until then, and which companies will most likely benefit from these developments.

We pay particular attention to the following:
  • world population growth,
  • demographic changes, and
  • decreasing global income inequality.

We have identified the defensive non-durable consumer goods (beta of 0.67), utilities (beta of 0.72), and healthcare (beta of 0.73), as the ones with the lowest betas to the broad market over a timeframe that includes the global financial crisis.

The historical analysis shows that the Next Generation Defensives strategy can add value to investors.

Key findings are:

  • The index would have generated a 9.72% annualized return over the analyzed period between May 08, 2006 and January 14, 2020, whereas the Solactive GBS Developed Markets Large & Mid Cap Index achieved 6.55%.
  • The low beta of the Next Generation Defensives Index (at 0.73) relative to the benchmark is appealing in times of rising uncertainty.
  • In all five stock market corrections we have examined, the index performed better than the benchmark.

Read the full white paper, including a detailed historical analysis of the underlying markets and sectors here: