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Capturing changes in demographics: Investing in emerging workforce markets

Capturing changes in demographics: Investing in emerging workforce markets
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Explosive growth in developing nations

Investors look abroad because the growth potential of developing nations can be explosive. But demographic trends are another important factor in evaluating growth opportunities. Countries like China, have a declining workforce due in part to the one-child law.  While India, on the other hand, has a younger growing skilled workforce. 

Overweighting the regions most primed for growth could create a unique investment opportunity. Investors looking for both strong growth and dividends could find what they seek in VettaFi’s new family of demographic dividend growth indexes. These indexes tilt towards countries and regions that have younger, rapidly growing populations going into the workforce.  

The VettaFi Developed Ex United States Demographic Dividend Growth Index (DXUDDG) modifies the VettaFi Developed World ex United States Index (VFDXUS) that focuses on developed countries ex-United States by applying a working age population growth factor to its constituent weight. The VettaFi Emerging Markets Demographic Dividend Growth Index (EMDDG) does the same to the VettaFi Emerging Markets Index (VFEM). 

Growing workforce populations

Growing workforce populations are a fundamental tailwind not often quantified in other models, creating a unique opportunity for issuers to enhance international exposure in areas poised for growth. 

Nations experiencing a decline in their workforce and an aging population are less likely to see economic growth. As older professionals retire, with fewer younger professionals coming up to take their place, underlying economies can easily stagnate or shrink, undercutting their growth potential. In contrast, a younger population with multiple early career professionals ready to take the place of the retiring generation tends to grow as the next generation of laborers takes over. A robust workforce with purchasing power is an enormous catalyst for growth.  

Leveraging the opportunities

Leveraging the opportunities available in countries with favorable demographics and burgeoning young workforces, these indexes can help provide exposure areas of explosive growth potential. To access exposures like the VettaFi Developed Ex United States Demographic Dividend Growth Index or the VettaFi Emerging Markets Demographic Dividend Growth Index, or customize a product based on your individual product needs, partner with VettaFi’s index experts.  

Learn more about VettaFi Indexing > 

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