When it comes to the intersection of consumer spending and demographic trends, millennials get plenty of attention, but Gen Z – the next generation – are on the rise and investors can use ETFs, such as the Principal Millennials Index ETF (GENY ), to tap Gen Z spending trends.
GENY tracks the Nasdaq Global Millennial Opportunity Index. This index seeks to capture the global spending and lifestyle activities of the largest generation ever, offering exposure to brand name companies specializing in social media, digital media, technology, healthy lifestyles, travel, and leisure. The companies will evolve over time as the spending patterns of millennials change as they age.
GENY offers investors exposure to Gen Z’s flair for brand loyalty.
“Our research shows that the gap between the Most Loved Brands and all others has widened in recent months, confirming that love is not only a catalyst for continued success in good times but also powerful protection from dramatic downturns in tough ones,” according to Morning Consult.
Gen Z Joins Millennials as a Power Demographic
ETFs allow investors to access broad swathes of the market or thin sector slices. As more grow accustomed to the ETF investment vehicle, traders are taking a more hands on approach, targeting smaller segments of the market in an attempt to generate alpha.
“COVID-19 has drastically impacted spending behavior, shopping habits and even selection criteria for all consumers – but Generation Z (born 1997-2012), and its decidedly different priorities, sense of purpose, and brand expectations creates unique challenges for today’s companies striving for both short-term survival and long-term growth,” notes Morning Consult.
Consumer habits will shape the way the economy will function moving forward, such as a growing gig-focused labor market.
Integral parts of the Gen Z-related investment thesis are shopping and entertainment consumption trends. Shopping and consumer trends are changing as more buyers rely on the convenience of online retailers to quickly and easily meet their discretionary needs. As the retail landscape changes, investors can also capitalize on the trend through ETFs that target the e-commerce segment.
Over a quarter of Gen Z’s favorite brands are food and beverage names and nearly 20% are radio and TV brands. GENY is levered to those themes because the fund allocates about 70% of its combined to the consumer discretionary and communication services sectors.