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Written by: TD Ameritrade
Over the past 10 years, more than $1.2 trillion of net new ETF shares have been issued, and the global ETF industry recently closed in on $3 trillion in assets under management.
Since its inception 22 years ago, the exchange-traded funds (ETFs) market has expanded to provide investors exposure to a wide variety of equity markets.
Given their lower cost than actively managed mutual funds and inherent diversification, ETFs are also proving to be a smart way for younger investors to begin their investment journeys. According to recent TD Ameritrade data, 14% of ETFs assets under custody are held by millennials. And while the three generations (Millennials, Generation X and Boomers) share some of the more common ETFs (VTI, SPY, QQQ) millennials are diversifying with real estate while Gen X and Boomers are more traditional and looking at gold. Millennials and Gen X are also lending more of a priority to emerging markets while Boomers are putting more money into growth and value.
With a constant threat of market volatility and risk, millennials are opting for emerging markets as they are projected to have higher returns over the long-term. Similarly, it seems boomers are moving away from traditional U.S. bonds, which are trading at historically low yields, and are choosing government bond ETFs.
According to the data, Gen X and Baby Boomers both show loyalty to the SPDR Gold Trust (ETF) (NYSE: GLD), as the world's largest gold ETF is a top 10 ETF holding among both demographics.
“Investing in emerging markets indicates that millennials and Gen X are thinking positively about the world outside of the U.S., yet when it comes to domestic markets, they are hedging their stock market bets with real estate,” says Keith Denerstein, director of guidance project management at TD Ameritrade.
“They understand the importance of diversifying their portfolio with U.S and international stocks, but a larger portion of their equity allocation is in emerging markets.