Millennials are an enormous demographic, totaling more than 70 million Americans—that’s roughly one in every five Americans you meet. Besides the group’s sheer size, two key things are happening right now from an investment perspective:
- First, millennials are just entering their prime earning years.
- Second, they’re about to inherit an enormous amount of wealth. By 2030, millennials are expected to hold roughly $20 trillion in assets, representing a five-fold increase versus today.
Millennials are already making their mark on investing—but most of traditional Wall Street is just waking up to this reality.
As a partner for the industry’s leading online investing platforms, Apex Clearing has an unprecedented view into the behaviors of millions in this rising class of investors. This includes being able to see and analyze what they’re investing in. We recently took a deep dive into our proprietary data on stock positions in the self-directed accounts of digital investors and compiled our key insights in a new report.
In this three-part blog series, we’ll highlight several key findings from the report. Here, we dig into millennials’ single-stock holdings and illustrate their preference for investing in disruptive companies that are rooted in innovative technology.
Hip to be Square in financial services
Take holdings in the financial services sector as a prime example. Among millennials, the most widely-owned financial brand isn’t a credit card company or an insurance giant—it’s the innovative mobile payments company Square. Traditional financial services providers, such as Wells Fargo and Citigroup, are ranked meaningfully lower among millennials (87th and 96th, respectively).
A digital focus
Millennials’ focus on companies that emphasize digital experiences extends beyond the financial services sector. They are opting to direct their investment dollars more frequently to Amazon and Netflix than Walmart or Costco, for example.
Betting big on China
Thanks to their bullish views on innovation and China’s continued economic potential, millennials are putting their money behind Chinese technology companies whose names many of us have never heard of, such as online entertainment service iQiyi, Inc. and e-commerce company JD.com, which rank 14th and 15th, respectively, among their holdings.
Closely tuned in to up-and-coming investment themes
Millennials are increasingly interested in marijuana stocks and video game stocks, two innovative pockets of the investment landscape which may often be overlooked by other generations.
When we analyzed holdings in September versus July 2018, we saw noteworthy moves in dollars invested in marijuana stocks:
- Aurora Cannabis Inc. exploded from 3,322nd to 101st
- India Globalization Capital Inc. shot up from 554th to 267th
- Tilray Inc. spiked from 275th to 32nd
- Canopy Growth Corp. moved up from 75th to 28th
- Cronos Group jumped from 57th to 31st
Several video game holdings also climbed the ranks during the same time frame:
- Electronic Arts moved up 50 spots (134th to 84th)
- Take-Two Interactive Software moved up 23 spots (89th to 66th)
- Activision Blizzard moved up 5 spots (30th to 25th)
Opportunities for financial services providers
For advisory practices and financial services firms interested in working with millennials, the findings illustrated here highlight several opportunities to take action, including:
- Weaving investors’ motivations into discussions about financial and investment objectives, and, when appropriate, adapting investment strategies to include unique exposures.
- Offering education around concepts like diversification, asset allocation and portfolio construction to help younger investors understand and adopt best practices, given millennials’ high levels of exposure to individual stocks.
For more details about our proprietary data, the full findings and what they mean for financial services providers, check out the full report.