Generation Z (Gen Z), comprised of those born between 1997 and 2013, is the generation with the youngest adults. As such, there are some investment implications for market participants to be aware of and capitalize on.
An interesting point regarding Gen Z is that some of the relevant investment themes applicable to this generation intersect with each other, making exchange traded funds pertinent avenues for capitalizing on this demographic’s consumer trends and values. Enter the Invesco ESG NASDAQ Next Gen 100 ETF (QQJG).
As its name implies, QQJG is an environmental, social, and governance (ESG) ETF. QQJG debuted in October 2021, and its portfolio is derived from the Nasdaq Next Generation 100 ESG Index. Home to 95 stocks, QQJG taps into Gen Z’s penchant for embracing technology as well as the demographic’s values-based investing tendencies.
A recent survey by Piper Sandler, which twice yearly examines teenagers’ buying habits, indicated that QQJG could be a relevant near-term consideration for tactical investors.
“The latest edition of this survey polled 5,690 teens between Feb. 13 and March 21. The wide-ranging survey saw teenagers reporting their spending this year will rise 2% from the spring of 2022 to $2,419. That figure was up 4% from the fall. Notably, it was spending among teen boys that is driving the increase,” reported Christina Cheddar Berk for CNBC.
While it might be surprising that teen boys are driving the increased spending and teen girls are dialing back apparel purchases, QQJG component Etsy (NASDAQ: ETSY), which was upgraded by Piper Sandler, remains positioned to capture its fair share of Gen Z consumer discretionary spending.
Beyond specific holdings, QQJG is relevant in the Gen Z investing conversation because ESG is a top priority for this demographic — so much so that some surveys suggest that some members of Gen Z will go so far as to turn down employment opportunities at companies with dubious ESG credentials. That’s important because, by the end of the current decade, it’s estimated that more than seven in 10 workers will be Gen Z.
That’s just one data point, but it underscores the point that companies can boost their appeal to younger investors by bolstering their ESG credentials and that there is merit in that endeavor.
“Management of risk is a demonstrated responsible investing (RI) portfolio benefit, one that asset managers as well as financial advisors need to help interested investors discern even more clearly,” Amy O’Brien, Nuveen’s global head of responsible investing, said in an announcement regarding a recent ESG survey conducted by the firm. “Although many investors are interested in RI’s positive impact on society, in their minds, the process of managing key ESG factors should also focus squarely on mitigating critical impediments to company performance.”
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