10/31/2017 Can Hipsters Grow Your Portfolio?

- Global X Millennials Thematic ETF (NASDAQ:MILN) | Seeking Alpha

Can Hipsters Grow Your Portfolio?

May.11.16 | About: Global X (MILN)

Summary

Everyone can now invest in market trends driven by America's newest majority
demographic - The Millennial.

The newly launched ETF may sound gimmicky but the fund offers the market an
innovative approach long-term growth.

As Millennials impact the future of the global economy the opportunity presents itself
for unconventional returns based around social conscious investing.

What You Need To Know:

Global X wants you to invest the largest growing population segment, or at least in their
spending habits. This month they have launched a new fund aimed at Millennial target
spending, Global X Millennials Thematic ETF (NASDAQ:MILN)

What is Thematic mean exactly? An example of the dynamic behind the strategy would be
to develop an advantage through long-term returns caused by stock mispricing and other
volatility due to demographic or social volatility. Simply put, MILN seeks to gain returns
based on long-term investment themes rather than focusing on short-term business
cycles. Thematic investing is referring to the process of recognizing large scale macro-
level trends and identifying investment options that can benefit from the developing theme.

Investing on a theme such as "Millennial Spending" goes past the typical screening of
vehicles that hypothetically benefit from events due to fluctuating economic policies such
as OPEC event or an expected interest rate increase. This macro-view style of screening
may help to deliver tomorrow's investors an edge in identifying opportunities rooted in
changing demographics, like the shift that just occurred between Baby Boomers and
Millennials.

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According to The U.S. Census Bureau's 2015 report, Americans born between 1982 and
2000 are now over 83 million strong in population. This represents more than one-quarter
of the nation and exceeds the 75.4 million Baby Boomers.

Global X Millennials Thematic ETF

The fund was launched just this month and is part of the latest attempt to marry social
trends with financial investing. Global X has a long history of bringing forth controversial
and unique vehicles for unconventional investors but we will save that topic for a future
article. What potential investors should look at today when comparing MILN and it's
holding against similar funds promoting "FANG" type strategies is the reasoning for the
allocation.

MILN passively manages $1,514,977.19 in funds, costing investors an annual fund

operating expense of 0.68%. The ETF selects only U.S. listed companies who have a
Market Cap of over $500 million and a secure amount of liquidity. Using criteria focused
on consumer spending, consumer behavior, technology and demographics, the fund has
identified eight target Millennial spending categories.

1. Social and Entertainment

2. Clothing and Apparel

3. Travel and Mobility

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10/31/2017 Can Hipsters Grow Your Portfolio? - Global X Millennials Thematic ETF (NASDAQ:MILN) | Seeking Alpha

4. Food/Restaurants and Consumer Staples

5. Financial Services and Investments

6. Housing and Home Goods

7. Education and Employment

8. Health and Fitness

MILN has a current portfolio allocation that reflects the interest of Millennials, focusing
heavily on Internet usage the products and services offered by publicly owned companies
who have met the funds criteria.

Unlike other funds with similar allocation, Global X will not seek short-term shelter in
nonrelated industries. That does not mean to say that the ETF will not change its
allocation or target categories over time. As Millennials age so will their spending habits
and the fund recognizes this coming shift.

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Why Millennials Matter

Companies who recognize the connection between Millennials and their spending habits
will become marketable to over 90 million consumers. Fueled by what some deem "The
Great Transfer", this demographic will inherit an estimated $40 trillion from U.S. Baby
Boomers to Millennials. Over the course of their lives, Millennial spending will translate to
real economic leverage and as their expendable income grows it will help drive the global
economy.

Millennials are socially conscious investors who will change the economic landscape. 67%
of Millennials that they invest as a way to "express their social, political or environmental
values". In the United States, the federal decision based upon Citizens United has
deemed that corporations are people and that money equates to free-speech. The savvy
Millennial understands that this means it's time to put their money with their moral and
political views lay.

Supporting this case for Millennials to become more socially responsible investors, 73%
believe that it is possible to compete with market rate returns on companies based on their
"social or environmental impact". The impact of their socially conscious driven investing
has not been felt by today's market but in the future there lays a possibility that a strong
balance sheet may not be as desirable as it once was if those profits are driven but
unethical or immoral motives.

Compared to Boomers, Millennials spend more of their money on products from

companies who demonstrate sustainability compared to the previous generation. This can
be looked as a way to illustrate that in the future, brand loyalty will not come from clever
packaging but instead the content of the packaging and the macro-impact the product has.

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10/31/2017 Can Hipsters Grow Your Portfolio? - Global X Millennials Thematic ETF (NASDAQ:MILN) | Seeking Alpha

Millennials Represent A Large Portion of U.S. Spending

Millennials are now the largest generation in the US and will make up 75% of the labor
force by 2025. As for their spending power, they will inherit an estimated $40 trillion from
the previous generation. This age group will become a key factor driving the future US
economy. For example, Millennials already account for $1.3 trillion in direct annual
consumer spending and that figure is expected to grow as their annual income reaches
$8.3 trillion over the next decade.

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10/31/2017 Can Hipsters Grow Your Portfolio? - Global X Millennials Thematic ETF (NASDAQ:MILN) | Seeking Alpha

*source: BofA / Merril Lynch - Thematic Investing Generation Next - Millennials Primer

Millennials Have Unique Spending Habits

Millennials are the first generation to be complete emerged in the concept of online
consumerism. At first, the market may have underestimated the impact of this digital shift
from the "Sears Catalog" style of directly marketing to at home customers but to keep the
Millennial generation brand loyal, companies have had to stay current with the technology.

Let's use a contemporary example of a brick and mortar institution from the Baby Boomer
generation, Radio Shack. The now bankrupt company failed to stay relevant to the
consumer in comparison to online retailers who took away much of their core business.
The company failed to adapt for many reasons but mainly the overhead incurred by their
business plan helped to expedite the process. Yesterday's direct sales plan of having "X"
amount of stores in proximity to "Y" amount of consumers proved to be too costly in
today's online dominated retail space. Even though many Millennials held a nostalgic view
of RadioShack, they would not change their spending habits in order to stay brand loyal.

Conclusion:

With the creation of this new fund, Global X intends to commoditize the Millennial
generation. This is not a new practice, it has been done by corporations since the onset of
the digital record-keeping era and successfully used by social media to convert their user-

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base into a marketable product. This interesting concept is in its infancy and will require
some time before the everyday investor understands these type of investment vehicles.

I look forward to seeing how the fund performs and intend to do a full analysis of the fund's
major holdings and their social impact. Let's just hope that I'm not covering beard
grooming products and vegan-tofu wholesalers for the next 25 years!

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