In the financial services community, perhaps only baby boomers get more attention than millennials. Fortunately for investors, millennial spending habits and tastes are themes accessible via ETFs, including the Principal Millennials Index ETF (Nasdaq: GENY).
GENY tracks the Nasdaq Global Millennial Opportunity Index. This index seeks to capture the global spending and lifestyle activities of the largest generation ever, offering exposure to brand name companies specializing in social media, digital media, technology, healthy lifestyles, travel, and leisure. The companies will evolve over time as the spending patterns of millennials change as they age.
The millennial generation is classified as U.S. citizens born approximately between 1980 and 2000. Millennials account for one-quarter of the nation’s population and are positioned to become a strong part of the workforce within the next decade.
Thematic investments aim to access the high growth potential of companies at the forefront of long-term, structural changes in the economy. By transcending classic sector and industry classifications, thematic investing seeks to harness macro-level trends and the investments best suited to benefit from those trends.
GENY “seeks companies that derive a significant proportion of their revenues from millennials, whose consumer preferences have been disruptive across the economic landscape,” according to Principal.
GENY in a Bottle
Investment themes expected to be bolstered by millennials include e-commerce/online retail and fintech.
Integral parts of the millennial-driven are shopping and entertainment consumption trends. Shopping and consumer trends are changing as more buyers rely on the convenience of online retailers to quickly and easily meet their discretionary needs. As the retail landscape changes, investors can also capitalize on the trend through ETFs that target the e-commerce segment.
As such, GENY allocates roughly 70% of its combined weight to the consumer discretionary and communication services sectors.
GENY includes those companies that are among the best positioned to benefit as Millennials, those aged 16-36, gradually enter peak earning years, and become a major force within the U.S. economy. Millennials currently earn roughly $2 trillion in income and are poised to earn roughly $8 trillion by 2025. Additionally, the total transfer of wealth from Baby Boomers to Millennials is expected to reach $40 trillion.
GENY holds 100 stocks, none of which exceeds a weight of 4%, and charges 0.45% per year, or $45 on a $10,000 investment.
For more on multi-factor strategies, visit our Multi-Factor Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.