4 ETFs That Invest in the Millennial Generation

A former broker and hedge fund trader, Jim Woods is fund and ETF expert and editor of several industry-leading newsletters. In his The Deep Woods, he reviews four ETFs that invest in companies poised to benefit from millennial spending trends. Global X Millennials Thematic ETF is the first exchange-traded fund to invest in millennial stocks. Now in its third year, Global X Millennials 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. workforce 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 -- Fiserv , Costco , Starbucks , Home Depot , Equity Residential , Apple , Walt Disney , Nike , Booking Holdings and Twitter . Global X Millennials is up more than 67% since it was formed in May 2016. MILN has beaten the market year to date, and is up around 28%, making it one of the best-performing, consumer-related ETFs so far in 2019. With a yield of 0.4%, Global X Millennials' 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. The exchange-traded fund also offers an opportunity for outstanding capital appreciation. The Invesco Dynamic Leisure and Entertainment ETF tracks a multifactor, tiered equal-weighted index of U.S. entertainment and leisure industry stocks. The exchanged-traded fund is based on the Dynamic Leisure & Entertainment Intellidex Index. The ETF normally will invest at least 90% of its total assets in common stocks that comprise the Index. The Intellidex Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment criteria that include price momentum, earnings momentum, quality, management action and value. The underlying Index is comprised of common stocks of 30 U.S. leisure and entertainment companies. These companies are principally engaged in the design, production or distribution of goods or services in the leisure and entertainment industries. The fund and the Index are rebalanced and reconstituted quarterly in February, May, August and November. Invesco Dynamic Leisure and Entertainment aims to pick winning stocks rather than deliver a market-cap-weighted basket that reflects the industry. Its stock selection process is a bit opaque beyond the broad descriptions of its screens: fundamental, timeliness, valuation and risk. Some might see value in this diversification, which mitigates single-stock risk, while others might see a lack of focus. In terms of firm size, the fund strays significantly away from large-caps. The fund's top sectors and their weighting in its portfolio include Restaurants & Bars, 41.26%; Airlines, 21.50%; Leisure and Recreation, 12.49%; Hotels, Motels & Cruises, 8.47%; and Food Retail & Distribution, 5.64%. The ETF's top holdings are United Airlines Holdings ; Booking Holdings ; Delta Air Lines ; Yum China Holdings ; and Chipotle Mexican Grill . Up 10% year to date, PEJ has done well to weather the many market corrections in 2019. It has 31 holdings, an average spread of 0.13% and an expense ratio of 0.63%, meaning it is relatively expensive to hold compared to other exchange-traded funds. Invesco Dynamic Leisure and Entertainment provides investors with exposure to Leisure and Entertainment stocks but their performance can be cyclical and based on economic strength. The iShares MSCI KLD 400 Social ETF has the word social in its name, but it does not track social media stocks. Rather, the ETF seeks out stocks with positive environmental, social and governance characteristics, as determined by iShares. Many millennials prioritize these factors when considering which companies to patronize for the purchase of goods and services. iShares MSCI KLD 400 Social ETF offers exposure to socially responsible U.S. companies that have been screened for the above-mentioned characteristics. The fund markets itself as a way to invest based on your personal values to entice investors who possess this characteristic. For those who invest based on such principles, then the stocks that make up iShares MSCI KLD 400 Social may gain added appeal. Despite the fact that this fund does not seem to strongly consider economic or technical factors in its stock selection, it has been performing well. It is up 26% year to date. Since its inception in 2006, its share price has more than doubled. However, over both time periods, the ETF's performance has closely tracked that of the S&P 500, performing just a little better both year to date and since 2006. The fund is currently near an all-time high. Its expense ratio is 0.25%. The fund offers a current dividend yield of 1.4%, so investors who like income might be inclined to give it a try. The five largest sector holdings in this fund are Information Technology, 27.4%; Communication, 14.4%; Health Care, 11.1%; Industrials, 9.49%; and Financials, 9.16%. As far as individual holdings, its five biggest ones are Microsoft Corp. , 7.86%; Alphabet Class C and Alphabet Class A shares, totaling 5.78%; Facebook , 3.44%; Visa , 2.28%; and Procter & Gamble , 2.19%. If you feel that millennial trends are likely to make their way into the investing world in the future, you may decide that iShares MSCI KLD 400 Social ETF is worth putting into your portfolio. ESports not only allow video game enthusiasts a chance to compete against each other, they have become so popular they also now offer an investment opportunity. Wall Street has taken notice and is providing a way to seek profits from the fast-growing trend by creating the ETFMG Video Game Tech ETF , one of a few millennial-based exchange-traded funds that have been launched to ride the wave. ESports events are filling arenas that are normally used for professional basketball, as ironic as that seems, and certain tournaments even are broadcast on major cable networks. There are more than 90 million millennials -- people who were born approximately between 1980 and 2000 -- representing about 35% of the labor force today and an expected 75% of U.S. workers by 2030, according to Global X. So, the market is huge. The age demographic of millennials recently replaced Baby Boomers as the largest in the United States. Investment firms have zeroed in on catering to millennials by studying their spending patterns, their gaming habits and other characteristics more than any other group. Additionally, millennials are making more money now than ever as the oldest ones have reached their late 30s. They're also expected to receive $30 trillion in wealth from baby boomers. ETFMG Video Game Tech ETF's top 10 holdings, which comprise 28.95% of its total assets, include major blue-chip names in the gaming industry. Holdings in the fund include: Square Enix Holdings (Tokyo: 9864); Activision Blizzard ; CD Projekt SA (Warsaw: CDR); Micro-Star International (Taipei: 2377); Capcom Co. Ltd. (Tokyo: 9697); NCsoft Corp. (South Korea: 036570); Bilibili ADR ; Take-Two Interactive Software ; Electronics Arts ; and Nintendo Co. Ltd. (7974). If you don't know these names, don't worry. Trust me, they're the most-recognizable stocks in the gaming industry. The ETF's share price is up about 11% so far this year. After its investors received the company's most recent dividend of $0.13 on Sept. 20, ETFMG Video Game Tech ETF's forward dividend yield equals about 1.55%. As always, please conduct your own due diligence, as you would with any investment, before deciding whether any of these funds fit your own individual portfolio.

4 ETFs That Invest in the Millennial Generation

These funds invest in companies poised to benefit from millennial spending trends.

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