The gap between boomers and millennials may feel particularly wide these days as the snarky #OkBoomer theme lingers on social media and the upcoming US presidential election adds extra heat to political conversations.1 Do the generational divides extend into the world of investments? Indeed, they do: Our recent Next Investor Outlook revealed several interesting differences between millennial and boomer investors, including diverging preferences for younger businesses and health care companies.
Let’s take a look at a few of them—and we promise, this is a friendly exploration, not one meant to sow discord. Our goal is to provide information to help financial services providers better understand the millennial cohort, a key demographic whose share of the national wealth is predicted to quadruple by 2030.2
Our analysis draws from the Apex Millennial 100, a ranking of the top 100 stocks owned by a subset of millennials. You can check out the full list of stocks as of December 31, 2019 here.
Different takes on “buy what you know”
Mutual-fund guru Peter Lynch famously advised investors to “buy what you know.” We see millennials heeding this advice as they favor shares of companies whose products they know and enjoy—particularly younger businesses that have come of age at the same time millennials have stepped into their prime earning and investing years.
In fact, the Apex Millennial 100 features more than 30 companies which made their public trading debuts within the last decade. The group includes innovative, tech-centric businesses offering products that many millennials use every day, such as electric auto and energy company Tesla (#3), Chinese online retail conglomerate Alibaba (#10), ecommerce software provider Shopify (#19) and payment services company Square (#21). Ride-hailing company Uber (#28), social platform Snap (#50) and plant-based protein producer Beyond Meat (#55) also feature prominently on the list for millennials.
Boomers support the latest and greatest too—but not to the same extent as millennials. For example, streaming device manufacturer Roku ranks #26 for millennial investors but comes in at #45 for boomers. Tesla gets some love from boomers, but only enough to rank #17; Shopify is a similar story, ranking #42 for boomers. Uber, Snap and Beyond Meat are notably absent from the older generation’s top 100.
Which companies do boomers favor that millennials might not? Our analysis points to a difference of opinion around health care holdings. Well-established businesses such as Medtronic, Amgen, Bristol-Myers Squibb and Abbott Laboratories all appear within the top 100 holdings for boomers, but they fail to land on the Apex Millennial 100. Industry stalwarts Pfizer (#59), UnitedHealth Group (#80) and Merck (#85) do make the cut for millennials, albeit at rankings well below those for boomers. One notable exception is Johnson & Johnson, which ranks #27 in the Apex Millennial 100.
Not so far apart when it comes to FAANGs
To paint a complete picture, it’s worth examining where the two groups’ investments overlap. When it comes to exposure to the mega-cap American tech companies which make up the “FAANG” stocks, the generations aren’t so far apart:
• Facebook – Millennials #4, Boomers #5
• Amazon – Millennials #2, Boomers #2
• Apple – Millennials #1, Boomers #1
• Netflix – Millennials #8, Boomers #10
• Alphabet (i.e., Google) – Millennials #12, Boomers #21
What this means for financial service providers
For advisory practices and financial services firms interested in working with millennials, we believe this data highlights that what boomers “know” often differs from what millennials “know.” Savvy providers are weaving millennial investors’ motivations into discussions about financial and investment objectives, and, when appropriate, adapting investment strategies to include unique exposures.
For more details about our proprietary data, our other key findings and what they mean for financial services providers, read the full report: