The fund also invests heavily in residential rental REITs, an allocation that may change if more millennials purchase their own homes and begin to migrate from city centers into the suburbs.
While Jacobs acknowledges that MILN does have some sector concentration, he says that the fund is also well diversified across more than 70 companies.
Other millennial-centric categories identified by MILN’s index include travel and mobility, food and consumer staples, financial services, home goods, education, health and fitness. INDXX selects five to 15 stocks from each category to construct the index. The components are weighted roughly by market capitalization and rebalanced annually.
Global X is an enthusiastic proponent of thematic investing, says Jacobs, especially when the theme captures a strong demographic trend like millennial growth.
“We believe that there are a lot of opportunities in the area of thematic investing, more than we see within the economic market-based world,” Jacobs says. “What’s happening demographically, where you see these bulges in populations and populations behaving differently, it’s tilting the economy out of equilibrium.”
Equity markets aren’t necessarily pricing in these demographic trends efficiently, says Jacobs, which could create opportunities to capture value and growth.
MILN is the ninth thematic ETF launched by Global X and the first in its ‘People’ category, which focuses on trends pertaining to changing demographics and consumer behaviors.
Thematic investing does have its limits, says Jacobs: Not every theme is suitable for investment.
“Some of them are low probability or too brief,” Jacobs says. “We think MILN is a long-term theme that hits the mark.”
Global X plans to expand the People category of thematic ETFs in coming weeks with the launches of the Global X Longevity Thematic ETF and the Global X Health & Wellness Thematic ETF.