As its name implies, the Global X Millennials Thematic ETF (NasdaqGM: MILN) focuses on investment themes and trends expected to benefit from millennials’ spending habits. That narrow demographic focus is helping, not hurting, the fund, which is up 24% this year.
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.
MILN, which just turned three years old, tracks the Indxx Millennials Thematic Index. Member firms “come from a broad range of categories, including: social media and entertainment, food and dining, clothing and apparel, health and fitness, travel and mobility, education and employment, housing and home goods, and financial services,” according to Global X.
A slew of compelling data points exist confirming the potential potency of investing in idea and sectors relevant to millennials.
“Representing 35% of the labor force today, Millennials are expected to be 75% of US workers by 2030,” according to Global X. “Around 40% have a bachelor’s degree or greater, compared to 29% for Gen Xers and 25% for Baby Boomers, when they were the same age. In addition, Millennials are set to inherit an estimated $30 trillion in wealth from the Baby Boomer generation.”
The Millennial Call
MILN provides exposure to more than 10 industry groups with significant exposure to interactive media, Internet retail, apparel retail and restaurant companies, among others.
MILN holds 75 stocks and the fund allocates about 27% of its weight to media companies and Internet retailers. The fund also features significant real estate and traditional retail exposure.
“Millennials have unique consumption preferences from prior generations, such as a particular affinity for leveraging technology, seeking experiences, and prioritizing health and wellness,” said Global X. “Our belief is that the firms that operate at the intersection between the major spending categories of where Millennials are spending money and their unique consumption habits and preferences are well-positioned to benefit from this major consumer shift. Conversely, companies that are unable to appeal to Millennial preferences are likely to suffer.”
Investment themes expected to be bolstered by millennials include e-commerce/online retail and fintech.
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 exchange traded funds that target the e-commerce segment.
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