Millennials - population with birth years ranging from 1980-2000 - are increasingly hogging the attention of the investing world. And why not? After all, this cohort seems to be a key growth driver of the U.S. economy, outpacing baby boomers in 2015 and reflecting over one quarter of the nation's population.
As this group has the prospect of comprising 75% of the workforce by 2025, it surely emerges as a long-term investing bet. As per research by Global X, millennials now earn about $2 trillion, with income projected to grow to $8 trillion by 2025.
While there are pure-play millennial ETFs namely Global X Millennials Thematic ETF (NASDAQ:MILN)and Principal Millennials Index ETF (NASDAQ:GENY)to tap this emerging trend, investors can also tap the below-mentioned ETFs which revolve around millennials.
Look for Value
Millennials are deemed to be value conscious. This part of the population has seen many upheavals in the global equity market, including the dot.com bubble burst in 2000, the fall of Lehman Brothers in 2008, and the resultant recession and the Eurozone debt crisis in 2011.
It is not surprising that the backlash of such recessionary events made the large part of this class edgy, value-driven and looking for what's being sold at bargains. A survey by TD Bank Group shows that about 37% of millennials not at all investing. Even Goldman Sachs confirmed the fact by indicating "lower employment levels and smaller incomes have left younger Millennials with less money than previous generations."
Thus, value ETFs, especially those that offer solid dividend yields, should be intriguing picks for Millennials. Our pick is the PowerShares S&P 500 High Dividend Low Volatility Portfolio ETF (NYSE:SPHD)yielding about 3.30% annually with a P/E ratio of 16.7 times, almost in line with the P/E of SPY at about 16.23 times.
Another choice in the present market scenario could be the iShares Morningstar Mid-Cap Value ETF (NYSEARCA:JKI)with 13.1 times of P/E and 2.20% dividend yield. On the global level, the First Trust Dow Jones Global Select Dividend Index ETF (NYSEARCA:FGD)with 13.8 times of P/E and 4.70% of yield can also be a fascinating pick.
Experiences Over Goods
As millennials are viewed as a class that prefers experiences to things, more of their earnings would be directed to the experiences or events than physical goods. So, investments related to holidaying and dining out should get prominence. The PowerShares Dynamic Food & Beverage Portfolio ETF (NYSE:PBJ) and the PowerShares Dynamic Leisure and Entertainment Portfolio ETF (NYSE:PEJ) may be considered by investors due to this preference.
Along with precedence over experiences, millennials have a fascination for healthy lifestyle, putting Global X Health & Wellness Thematic ETF (NASDAQ:BFIT) in focus.
Social Media on the Radar
Millennials love to indulge in social media. As per a report by Goldman Sachs Global Investment Research, 44% of millennials are into text messaging, 38% in both social media and instant messaging and 16% in blogging - higher than any other generation.
Broader Technology a Sweet Spot
Not only social media, millennials are known for their tech mania. As much as 50% of millennials play video games compared with 27% Gen X and 16% Boomers. About 45% are busy chatting compared with 31% Gen X and 10% Boomers. Apart from these, downloading music/videos, watching TV online are also in the bucket list of millennials. As a result, the PureFunds Video Game Tech ETF (NYSEARCA:GAMR) and the PowerShares NASDAQ Internet Portfolio ETF (NASDAQ:PNQI)will catch investors' attention.
Home Buying in the Cards?
Though the percentage of millennials staying with their parents has risen over the years, Goldman's study reveals that about 93% of the millennials want to buy a home at some point in the future. This should push up home sales. In any case, the housing sector is in great shape lately with new home sales for the month of July peaking to highest level in nine years. So, investors can definitely take a look at the SPDR Homebuilders ETF (NYSEARCA:XHB).