It appears there’s an ETF boom. The interesting twist is that it is geared towards millennials. As reported by the consultancy ETFGI, last year the ETF industry accelerated its expansion worldwide in a record-breaking year, with inflows topping $338.3 billion, up 36 percent on the previous year. This surpassed the $272.2 billion record for inflows set in 2008, according to ETFGI.
So with ETFs coming out at a record pace, why are millennials being targeted? As a millennial myself, I see the interest of investing early. When able to do so, it’s important to set up for the future and invest in an informed and intelligent manner. And I’m not alone.
It is proven that more and more millennials are investing earlier than the baby boomer generation. The Investment Company Institute states that the average adult millennial starts investing or purchasing mutual funds at 23, while the average Gen Xer started at age 26. Baby boomers, by contrast, waited until they are 30 to invest.
There are several ETFs on the market that use the minds and purchasing direction of millennials to source data. Some products include the Sprott Buzz Social Media Insights ETF (ticker: BUZ), the Global X Millennials Thematic ETF (ticker: MILN) and my company’s CrowdInvest Wisdom ETF (ticker: WIZE).
So what makes these companies work and where are the parallels?
- Millennial-focused companies are within the ETFs.
- Most holdings are large-cap, so there could be less risk.
- Big data is utilized on social platforms to gauge user sentiment.
- Consumer cyclical companies are the most prominent sector in the indexes.
- Millennials are able to drive/engage with the product.
Advisors need to watch these ETFs. With millions being poured into these products, not all booms are temporary. The Internet boom made a lasting impression and maybe today the millennial-focused ETF has the leg power to make a similar impact.
Annie Wyatt, CEO of CrowdInvest, is responsible for overseeing the CrowdInvest app’s intersection with the CrowdInvest Wisdom Index and the CrowdInvest Wisdom ETF.