This Millennial ETF May be Able to Beat the Market

(Note: This is the first in a series of ETF Talks on the Millennial generation).

The Global X Millennials Thematic ETF (MILN) is the first exchange-traded fund (ETF) to invest in millennial stocks.

Now in its third year, MILN tracks “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 the fund’s management company, Global X. The U.S. Census Bureau uses birth years for Millennials that span the early 1980s and early 2000s.

In contrast, to keep the Millennial generation analytically meaningful, and to separate it from the next cohort, called Generation Z, Pew Research Center uses 1996 as the last birth year for this age group and begins it in 1981. Nonetheless, data show the more than 90 million Millennials born between 1980 and 2000 recently became the largest demographic group in the United States, replacing Baby Boomers, who the Census Bureau designates as those born after World War II, starting in 1946 and extending through 1964.

Wall Street understandably is taking notice of the spending habits of Millennials. Many data points show Millennial-focused stocks and ETFs could become potentially potent investments.

Millennials are about 35% of the labor force today and are expected to compose 75% of the U.S. work force by 2030, according to Global X. Additionally, Millennials have been forecast to receive $30 trillion in wealth from Baby Boomers.

In 2019, the oldest Millennials are in their late 30s, which is an age when many people start families and form households. As people age and increase their earning power, their spending tends to rise until it tapers off when they reach their 50s, according to Census Bureau data.

The fund’s top 10 holdings, comprising 33.22% of its total assets, are in some of the biggest blue-chip stocks that Millennials love. They are: Fiserv Inc. (NASDAQ:FISV), 3.50%; Costco Wholesale Corp. (NASDAQ:COST), 3.44%; Starbucks Corp. (NASDAQ:SBUX), 3.44%; The Home Depot Inc. (NYSE:HD), 3.42%; Equity Residential (NYSE:EQR), 3.31%; Apple Inc. (NASDAQ:AAPL), 3.28%; The Walt Disney Co. (NYSE:DIS), 3.26%; Nike Inc B (NYSE:NKE), 3.25%; Booking Holdings Inc. (NASDAQ:BKNG), 3.17%; and Twitter Inc. (NYSE:TWTR), 3.15%.

Chart courtesy of StockCharts.com

MILN is up more than 67% since it was formed in May 2016. As the chart above shows, MILN has beaten the market year to date, and is up more than 27%, making it one of the best-performing, consumer-related ETFs so far in 2019.

With a yield of 0.4%, MILN’s investors received dividend payments on December 28, 2018, and June 27, 2019, of $0.085 and $0.021, respectively. The yield is not much, but it beats what many banks pay. MILN also offers an opportunity for outstanding capital appreciation.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.