The Strategic Case for International Developed Markets Equity in a Demographically Shaped Post-Pandemic World

The post-pandemic world is being reshaped by demographic forces that are both profound and irreversible. In developed markets, the twin pressures of aging populations and declining birth rates are redefining the economic landscape, creating both challenges and opportunities for investors. According to a report by the World Economic Forum, the median age in the U.S. has risen to 38.5 in 2025, up from 34.2 in 2000, while fertility rates globally remain below the replacement level of 2.1 children per woman [1]. These trends are not merely statistical abstractions; they are driving structural shifts in labor markets, healthcare demand, and public finances.

Demographic Tailwinds and Sector-Specific Opportunities

The aging population is a double-edged sword. On one hand, it reduces the size of the working-age population, increasing fiscal burdens as governments grapple with rising healthcare and retirement costs. On the other, it creates a surge in demand for healthcare services and technologies tailored to an elderly demographic. For instance, healthcare expenditures in the U.S. are projected to rise from $4.3 trillion in 2021 to $7.2 trillion by 2031, driven by the shift from inpatient to outpatient care and the proliferation of value-based models [3]. This transition is already reflected in the Q2 2025 strategies of equity funds, which are prioritizing companies like Community Healthcare Trust (CHCT), which focuses on outpatient facilities, and Apollo Hospitals in India, a high-quality global player [2].

The healthcare sector’s resilience is further underscored by its inelastic demand and high barriers to entry. As noted in the Q2 2025 commentary by Harding Loevner International Equity, the sector’s regulatory advantages and patient-centric growth models make it a compelling long-term bet [1]. Mergers and acquisitions in ambulatory surgery centers and physician practice management (PPM) have surged, with 230 PPM transactions in the first half of 2025 alone, reflecting a strategic recalibration toward outpatient care [1].

Geopolitical Uncertainty and the Defense Sector

While demographic trends shape the domestic landscape, geopolitical tensions are redefining global investment priorities. The U.S. Congress’s “One Big Beautiful Bill” in Q2 2025, which allocated $150 billion to defense spending, exemplifies this shift. Funded by cuts to green technology subsidies, this reallocation underscores a strategic pivot toward national security amid rising competition with China and Middle Eastern instability [1]. Defense sector allocations in international equity funds, such as those tracked by the MarketVector™ Global Defense Industry Index (MVDEF), have gained traction as investors seek exposure to companies like Safran (France) and Siemens, which benefit from NATO’s pledge to increase defense budgets to 3.5% of GDP by 2035 [4].

The Titan Wealth Global Blue Chip Fund’s Q2 2025 strategy highlights the sector’s appeal, with strong returns from industrial automation and defense-related infrastructure. Investments in AI-driven technologies and advanced manufacturing—critical for maintaining military superiority—are now central to portfolio construction [5]. These trends align with broader global rearmament efforts, including Saudi Arabia’s $600 billion commitment to U.S. defense and technology sectors [1].

Navigating the New Normal

The interplay of demographic and geopolitical forces demands a nuanced investment approach. International developed markets equity funds are increasingly favoring sectors that address both aging populations and strategic security needs. For example, Harding Loevner’s Q2 2025 commentary emphasizes global diversification, noting that European aerospace and defense firms, despite structural challenges like state ownership, are poised to benefit from NATO’s spending plans [2]. Similarly, the Fidelity Select Health Care Portfolio outperformed the MSCI health care index in Q2 2025, underscoring the sector’s ability to weather macroeconomic volatility [2].

However, risks persist. Immigration policy shifts, such as those under the Trump administration, have exacerbated labor shortages in critical industries like healthcare and construction, reducing GDP growth by 0.75–1 percentage points in 2025 [2]. These uncertainties highlight the importance of hedging against policy-driven disruptions while capitalizing on long-term demographic tailwinds.

Conclusion

The strategic case for international developed markets equity lies in its alignment with structural demographic and geopolitical trends. Healthcare and defense sectors, in particular, offer robust opportunities for investors seeking to capitalize on inelastic demand and strategic reallocations. As central banks maintain higher interest rates and trade tensions persist, funds that prioritize high-quality, growing companies—such as those expanding outpatient infrastructure or leveraging AI in defense—will likely outperform. The Q2 2025 strategies of leading funds confirm this thesis, positioning investors to navigate a world where demographic shifts and geopolitical risks are not just challenges but catalysts for innovation and growth.

Source:
[1] 5 transformational trends shaping global finance [https://www.weforum.org/stories/2025/01/5-transformational-trends-shaping-global-finance/]
[2] Q2 2025 Global Blue Chip Insights | Titan Wealth [https://www.titanwci.com/news-insights/2025/july/q2-2025-global-blue-chip-insights/]
[3] Healthcare: Industry Trends Q2 2025 | F1GMAT Premium [https://premium.f1gmat.com/healthcare/trends/2025/Q2]
[4] MarketVector™ Global Defense Industry Index [https://www.marketvector.com/indexes/sector/marketvector-global-defense-industry]
[5] Q2 2025 Economic and Market Outlook [https://www.trilliuminvest.com/newsroom/q2-2025-economic-and-market-outlook]