A key baby boomer exposure

Founder and Chief Investment Officer of Montgomery Investment Management
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Key points

  • Challenger has established itself as the main provider of annuities in Australia.
  • As baby boomers retire, assets in retirement are expected to quadruple over the next decade.
  • Over the next two decades, Challenger’s sales of new annuities could be 30 times higher than they are today.

 

We believe that Challenger Financial Limited (ASX: CGF) is a high quality business as demonstrated by the company’s privileged position in a rapidly growing market segment that Challenger itself has largely developed and fostered in Australia.

Whilst many other businesses have, until now, focused solely on the wealth accumulation market, Challenger has built a large high-quality business that has, to a certain degree, ring-fenced a portion of those assets entering their drawn-down or retirement years. A segment that, due to adverse market events such as the GFC, is gaining penetration for those who are risk-adverse and cannot handle the volatility sometimes associated with pure equity-based products.

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