An old adage states that “there is nothing new under the Sun.”
Indeed, as far back as anyone can remember, generations of human beings always have been locked in disagreement with each other about the various political, economic and social issues of the day. For instance, the Greatest Generation’s viewpoint conflicted with Generation X.
Later, Generation X’s ideas began to run into resistance from Generation Y, and it seems like this process will continue for the foreseeable future. Since Generation Y, also referred to as millennials born between 1981 and 1996, compose the largest cohort since the Baby Boomers, it is not surprising that the tastes, interests and desires of people in that group will shape the modern economy for some time to come.
The key characteristics of millennials are their racial and ethnic diversity, their independence and their sense of empowerment. Companies likely will need to change their product offerings to attract and retain the attention of the children of the technological revolution.
An exchange-traded fund (ETF) called the Global X Millennials Thematic ETF (NASDAQ:MILN) was specifically constructed to reflect the zeitgeist of this new generation. Thus, MILN tracks an index composed of U.S.-listed companies that derive a significant source of their revenue from spending categories associated with millennials.
The index divides the market into several spending categories that its managers deem to be of vital importance to millennials. These include entertainment, travel, food, education and so on. Then, between five and 15 companies are placed in each category and scored by the level of their exposure. From there, the companies that are deemed to have the highest level of focus vis-à-vis millennials are scored by another scale and then weighted by market capitalization.
Some of this fund’s top holdings include Square, Inc. Class A (NYSE:SQ), PayPal Holdings Inc. (NASDAQ: PYPL), Lowe’s Companies (NYSE: LOW), Apple Inc. (NASDAQ: AAPL), Spotify Technology SA (NYSE: SPOT), eBay Inc. (NASDAQ: EBAY), Amazon.com, Inc. (NASDAQ:AMZN) and Facebook, Inc. Class A (NASDAQ: FB).
Chart courtesy of www.stockcharts.com
This fund’s performance has been relatively strong, even when including the damage done by the COVID-19 pandemic. As of Oct. 20, MILN has been up 8.07% over the past month and 10.92% for the past three months. It is currently up 25.94% year to date. The fund has amassed $101.52 million in assets under management and has an expense ratio of 0.50%.
In short, while MILN does provide an investor with a chance to tap into the hip, modern, trendy and cool world of the millennials, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.
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.