By Jeff Reeves, MarketWatch
You don’t have to look far to find proof behind the old saying that “demography is destiny.” Baby boomers tend to get most of the attention on this front, as evidenced by observations about how older Americans are reshaping health care and the U.S. Social Security system.
But if Boomers have gotten us to where we are in 2019, millennials will assuredly get us to where we are headed. Sure, millennials aren’t isn’t buying homes or cars or investing in stocks at the pace of their elders, but as a group they are certainly not broke and surfing mom’s couch as some of the clichés make them out to be doing.
Last year, a Pew Research report showed that Americans born between 1981 and 1996 had become the largest generation in the labor force. And given the obvious struggles of their elders, there are multiple data points proving millennials are much more responsible with money than their elders were. This includes the fact that those under 35 have an average of about $5,800 in credit card debt, compared with $8,200 for 35-44-year-olds and more than $9,000 for 45-54-year-olds, according to ValuePenguin .
Millennials clearly have financial power. And investors who play by the old rules better start looking to the future instead of the past.
If you’re looking to cash in on millennial behavior, there are a few one-stop funds out there, including Principal Millennials Index ETF /zigman2/quotes/204107650/composite GENY +0.04% , which has slightly outperformed the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.48% over the last two years, and Global X Millennials Thematic ETF /zigman2/quotes/207036832/composite MILN +0.55% , which is up 40% over the past 24 months to more than double the performance of the S&P 500.
But if you want to buy individual trends, here are five worth a look:
1. Autonomous vehicles
Sure, millennials as a group not be in the market for SUVs. But that doesn’t mean they sit at home. Uber Technologies /zigman2/quotes/211348248/composite UBER +6.35% and Lyft /zigman2/quotes/208999293/composite LYFT -1.48% are mainstays of this generation and an obvious part of their future.
An Orbis Research report predicts a roughly 20% annual growth rate that propels the total ride-sharing market to a massive $220 billion by 2025.
You could try to guess which firm will get to self-driving cars first, either by investing in these ride-sharing firms or making a pure play on the artificial intelligence behind this technology via a company like Alphabet /zigman2/quotes/205453964/composite GOOG +0.86% /zigman2/quotes/202490156/composite GOOGL +1.08% . However, ETFs are popping up to help investors capture the top players in the space. These include KraneShares Electric Vehicles & Future Mobility Index ETF /zigman2/quotes/207579419/composite KARS +1.13% and Global X Autonomous & Electric Vehicles ETF /zigman2/quotes/208908060/composite DRIV +0.63% . Both have legacy auto makers in their portfolios as well as companies working on emission-free EVs, but if you want to play the future of transportation they offer simple ways to do so.
2. Organic food
Investors who have trusted old-school consumer staples names over the past few years have been burned by many big names. Shares of Campbell Soup /zigman2/quotes/202107764/composite CPB +2.95% and cereal giant General Mills /zigman2/quotes/206659526/composite GIS +1.83% have both gained less than 10% over the past five years compared with a roughly 50% gain for the S&P 500.
That’s because people’s tastes have moved away from these companies — driven in large part by millennials eating fresher and more natural foods. Organic food sales now represent almost 6% of total food sales in the U.S., according to the Organic Trade Association. That tally rose about 6% in 2018 to reach $47.9 billion, which was an increase of more than 33% from 2014 and roughly double the total in 2009.
Individual names in the space such as organics distributor United Natural Foods /zigman2/quotes/202981234/composite UNFI +8.17% are worth a look to play this trend, but can be volatile as they are smaller and less mature than typical staples names. For those looking to diversify broadly across the organics space, The Organics ETF offers a one-stop shop with holdings that include UNFI, Sprouts Farmers Market /zigman2/quotes/209197151/composite SFM +1.49% and others.