Global X Funds has launched an exchange traded fund designed to take advantage of Millennials' growing spending power.
Millennials--which Global X defines as people born between 1980 and 2000--recently became the largest generation in America, numbering between 75 million and 90 million depending on who's counting. About a year ago they became the largest generation in the labor force. According to Global X, the generation currently earns about $2 trillion in income, a figure they say could reach $8 trillion by 2025. Plus, Baby Boomers are expected to transfer $40 trillion in wealth to Millennials in the coming decades.
The new fund, (ticker: MILN), includes 73 companies deemed best positioned to benefit from this generation wide boost in disposable income. Top holdings include tech companies like
"As Millennials enter their prime earning years, companies that cater to their unique spending preferences are expected to gain market share," said Global X's Director of Research Jay Jacobs in a statement. "These companies can come from a broad range of industries and hit on a variety of sub-themes inherent with millennials, such as the use of social media, consumption of digital content, a focus on health and wellness, and investment in education and career advancement, among many others."
Holdings were chosen by, first,determining what categories Millennials currently spend money in and then screening for companies that derive more than 50% of revenue from one of these categories. Companies with the proper revenue makeup were then scored based on how well they fit Millennial preferences and life stage. Companies also need a market capitalization of at least $500 million and six-month average daily turnover of at least $2 million to be included. Holdings are reevaluated and rebalanced annually.
With just $1.5 million in assets, it is an understatement to call Global X Millennials Thematic ETF tiny. Nevertheless, the fund is perhaps the first to tackle America's ongoing demographic shift head on and should be interesting to watch.
