Few age demographics get the attention that millennials, people born between 1980 and 2000, do. While irksome to some (looking at you Gen X), investors of all age groups can tap into millennial shopping and spending habits.
Rather than identifying individual stocks with exposure to millennials, investors can make accessing this theme easier with exchange traded funds (ETFs), such as the Global X Millennials Thematic ETF (MILN).
MILN recently turned three years old and follows the Indxx Millennials Thematic Index. While the investment niche often associated with millennials is social media, this ETF goes beyond that industry to include companies from the following industries : food and dining, clothing and apparel, health and fitness, travel and mobility, education and employment, housing and home goods, and financial services.
While MILN is sure to have some critics picking apart its status as a still small ETF (about $50 million in assets under management), it narrow investment objective or its low average daily volume, the fund's recent performance is impressive. Year-to-date, MILN is up 24.05 percent. Looked at another way, this year MILMN is beating the largest consumer discretionary, retail and social media ETFs, relevant comparisons because the millennial fund features significant exposure to those industries.
How They Spend Matters
Spending trends across age groups are not uniform. Baby boomers are likely to be reining in discretionary spending in favor of bolstering retirement savings and making sure they have enough cash to cover healthcare costs. Members of Gen X are just as likely to be grappling with retirement and college planning as they are to be spending money at Starbucks.
Point is age is relevant when it comes to analyzing spending habits and trends and investors should note millennials have unique spending patterns relative to baby boomers and Gen X.
“Millennials have unique consumption preferences from prior generations, such as a particular affinity for leveraging technology, seeking experiences, and prioritizing health and wellness,” according to Global X research . “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.”
MILN holds about 70 stocks, many of which can be considered disruptors in their respective industries or wide moat firms. Millennials use financial services like the rest of us, but MILN's holdings in that space err on the side of fintech with Intuit Inc. (INTU ) and PayPal Holdings, Inc. (PYPL ) ranking as the fund's top two holdings.
Other industry leaders on the fund's roster include the likes of Costco Wholesale Inc. (COST), Stabucks Corp. (SBUX) and Amazon.com Inc. (AMZN).
Follow The Trends
Several industries stand will be transformed by and benefit from exposure to millennials. Financial services, meaning fintech, and retail, or online retail, are among the opportunities for all investors to harness as they relate to the 1980 through 2000 generation.
“Take Venmo, PayPal’s mobile payment service, which is a platform that has struck a chord with Millennials by allowing them to digitally send money and make purchases,” according to Global X. “75% of Millennials have used online or mobile payments compared to only 51% for Boomers.”
Favorable data points continue piling up for online retailers and millennials are a big reason for that trend.
“The shift to online shopping remains an important trend among Millennials,” said Global X. “The US e-commerce industry continues to show strong growth backed not only by faster delivery times that enhances the attractiveness of shopping online, but also by having greater selection of goods.”