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Ride the Millennial Wave With These ETFs

Sanghamitra Saha

Millennials — people born between 1980 and 2000 — are increasingly being followed by the investing world. After all, this cohort seems to be a key growth driver of the U.S. economy, outpacing baby boomers in 2015 and reflecting over a quarter of the nation’s population.

Millennials are expected to overtake Boomers in U.S. population this year as their numbers are likely to touch 73 million and Boomers slip to 72 million, per a research house. The research house went on to point out that immigration added “more population to this group than any other” and the millennial population is likely to jump to 76.2 million in 2036.

As this section of the population has chances of making up 75% of the workforce by 2025, businesses that will likely benefit from their habits could offer solid returns to investors. Per research by Global X, millennials now earn about $2 trillion, with income projected to grow to $8 trillion by 2025. Millennials’ spending is likewise expected to rise to $1.4 trillion annually and account for 30% of total retail sales by 2020, according to Accenture(read: Why Millennial ETFs Are Beating the Market).

Against this backdrop, we highlight a few ETF strategies that will benefit from the rise in millennials.

Home Buying: Millennials’ Preference

Though the percentage of millennials staying with their parents has risen over the years, “many millennials are now reaching prime home-buying age — 30 to 35 years old” — and that could drive sales for homebuilding companies.

John Lovallo, home builder analyst for Bank of America Merrill Lynch, noted that “in 2025 there are going to be 3 million more millennials than baby boomers at their peak in 1987,” which could propel the homebuying industry. SPDR S&P Homebuilders ETF XHB could thus benefit to a great extent (read: ETFs to Grab as US Existing Home Sales Hit a 5-Month High).

Experiences Over Goods

As millennials are viewed as a class that prefers experiences over material goods, more of their earnings are likely to be directed to experiences or events. So, investments related to holidaying and dining out should get prominence. Invesco Dynamic Food & Beverage Fund PBJ and Invesco Dynamic Leisure and Entertainment ETF PEJ may be considered by investors due to this preference.

Broader Technology a Sweet Spot

Millennials are known for their obsession with technology. About 92% millennials own smartphones compared with 85% of Gen Xers, 67% of Baby Boomers (and 30% of the Silent Generation, according to an analysis of Pew Research Center data, released in May 2018. Apart from these, downloading music/videos, watching TV online are common practices among millennials. A huge section of millennials (85%) are quite savvy with social media.

Invesco NASDAQ Internet ETF PNQI, Global X Social Media ETF SOCL and Technology Select Sector SPDR Fund XLK should thus catch investors’ attention (read: Sign In to Social Media ETFs as Twitter Soars on Q2 Results).

Organic & Healthy Food Habits

Millennials are currently the driving factor behind organic produce sales. This section of the population is health conscious and aware of the importance of food standards and production methods. This bodes well for Global X Health & Wellness Thematic ETF BFIT and The Organics ETF ORG.

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SPDR S&P Homebuilders ETF (XHB): ETF Research Reports
 
Invesco NASDAQ Internet ETF (PNQI): ETF Research Reports
 
Global X Health & Wellness Thematic ETF (BFIT): ETF Research Reports
 
Technology Select Sector SPDR Fund (XLK): ETF Research Reports
 
The Organics ETF (ORG): ETF Research Reports
 
Invesco Dynamic Food & Beverage ETF (PBJ): ETF Research Reports
 
Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports
 
Global X Social Media ETF (SOCL): ETF Research Reports
 
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