Millenials, or those born in the 1980s through 1990s, have exhibited risk seeking attributes through their investment preferences with one leveraged exchange traded note among their top trades.
Along with trading individual company stocks that they know or identify the most with, millennial investors also heavily traded the VelocityShares 3x Long Crude ETN (NYSEArca: UWTI), according to TD Ameritrade.
Among millennial’s top traded securities of 2015, UWTI was the fifth most popular investment, behind Disney (NYSE: DIS), Facebook (NasdaqGS: FB), Netflix (NasadqGS: NFLX) and Apple (NasdaqGS: AAPL).
UWTI tracks three times or 300% the daily performance of WTI crude. The ETN has grown increasingly more popular as oil prices continued to plunge and traders tried to time a market bottom. UWTI has attracted $718.6 million in net inflows this year, according to ETF.com, as crude oil prices slipped to 12-year lows.
Due to its leveraged strategy, UWTI is seen as a risky investment that could potentially generate a lucrative payout for more aggressive traders with a short-term outlook.
UWTI has declined 63.3% year-to-date and has plunged 96.1% over the past year. However, millennial traders have not been sticking around. Nicole Sherrod, managing director for trading at TD Ameritrade, said that short-term trades on UWTI have been more popular among millenials because of the risk factor, whereas older investors are more risk adverse, reports Sally French for MarketWatch.
“It’s way more risky than the broad market,” Sherrod told MarketWatch. “I would not say this is dangerous, just that’s it’s more risky. The younger you are, the more aggressive you can be in your investment strategy.”
The risky trade has been paying off in recent sessions as UWTI has jumped 44.4% over the past three days. [Oil ETFs Bounce on Production Freeze Plans]
TD Ameritrade also found that millennials are less apt to invest in mutual funds and steered toward investments with no management and less fees. Specifically, stocks were the most heavily traded security type among millennials at 55%, followed by options 26%, futures 11%, ETFs 7%, forex 2% and mutual stock/bond funds less than 1%.
“The millennial audience has a distrust for Wall Street,” Sherrod added. “They steer away from products that are managed by a professional.”
Source: TD Ameritrade
Max Chen contributed to this article.