Global obesity is a mega-investment theme for the next 25 years and beyond. Obesity may be the most pressing health challenge facing the world today and efforts to tackle it will shape thinking by policy makers and in boardrooms around the world.

~Sarbjit Nahal, equity strategist at BofA Merrill Lynch Global Research

The impact of obesity on our body is something we hear about all the time. The impact of obesity on our investment portfolio is something we don’t think about.

A research report was released last year by Bank of America Merrill Lynch titled, “Globesity – The Global Fight Against Obesity”.  It, like most research reports from investment firms, was intended to be a guide to help investors in making smart money decisions.  This particular report detailed some interesting facts:

  • They identified the efforts to reduce obesity as a “mega trend” – a trend to last the next 25 to 50 years.

    There are no quick fixes to this problem. We need to accept that it will take generations to change food policy, workplaces and our own attitudes about weight management.

  • Obesity is not just about the United States.

    Obesity in Europe has tripled in 30 years. While they haven’t matched the level of obesity that we see in the United States, they are gaining ground as American habits replace traditional foods and customs.

  • The costs of obesity related illness is growing faster than we thought.

    In May 2012 the U.S. Institute of Medicine estimated the annual cost of obesity related illness in the United States to be $190 billion – 21% of annual medical spending. The previous estimate had been 10%.

What are we doing about all this? That’s really the point of the report – where can investors focus their money to take advantage of this mega-trend?  They highlight four key “entry points”, which may disturb me more than the facts presented above.

  1. Pharmaceuticals and Healthcare:

    Those bigger beds and joint replacements mean bigger bucks for manufacturers. The FDA also seems more willing to approve pills for weight loss, even when these medications provide minimal results. While there may be money to be made, these options seem to have very little to do with fixing the problem in the long term.

  2. Food:

    This is the first thing on the list that would go a long way towards making a real difference in the obesity epidemic. Except in investment terms, it means encouraging food processors and chemists to find new ways to improve the nutritional profiles of their products to avoid “fat taxes”. Lowering sugar in products can be a good thing, but it’s not encouraging consumption of the nutrient rich foods so many people are missing.  Our real focus should be encouraging consumption and production of whole foods or solving the problem of food deserts.

  3. Commercial Weight Loss, Diet Management and Nutrition:

    I am dismayed Nutrition comes last in this trio. The report says up to 50% of the U.S. is “dieting”. Diets are part of the problem, not the solution. Good nutrition and behavior change are keys to real fitness and weight management. Prepackaged meal services and quick fix weight loss clinics are not.

  4. Sports Apparel and Equipment.

    Let’s hope that the rise in the sale of yoga pants means people are doing more yoga and not purchasing them for their forgiving waistbands.  I do hope more people buy running shoes and kettlebells!

While my research methods may not be as sophisticated as those used by the team at BoA Merrill Lynch, I do find them reliable. In a recent session, 2 clients were discussing how much stronger they felt and the compliments they had been receiving. They both agreed that their personal training sessions were the best investment they had ever made. While their investment many not translate into a retirement account it will save them money in health care costs and give them the ability to enjoy long, productive and happy lives.

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