Take it from a curmudgeonly member of Generation X, we're unloved. Well, maybe not unloved, but we of the Family Ties, Miami Vice, glam rock, grunge and East Coast/West Coast hsip hop generation are pretty much ignored by the financial services community.
Here's two cents (and more could be easily be wagered because it is easy to substantiate): Traditional asset managers, wire house brokers and yes, even issuers of exchange-traded funds, are focused too intensely on garnering assets from Baby Boomers and Millennials.
Well, recent data suggest ETF issuers might want to have a closer look at what age group is buttering their metaphorical bread.
Importantly, the data indicate Gen Xers are widely embracing ETFs and for some of the largest ETF issuers, whether they know and/or like it or not, Gen X is the demographic representing the highest user penetration.
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While Millennial and Gen X investors combined represent only 37 percent of affluent Americans, they comprise a majority (55 percent) of ETF owners. Nearly four in ten (38 percent) Millennials and one in five (21 percent) Gen X investors report owning ETFs, compared to just 14 percent of Second Wave Boomers, 12 percent of First Wave Boomers and 11 percent of Silent Generation investors. Furthermore, despite being an average of 8 years younger than non-owners (48 years vs. 56 years, respectively), investors who own ETFs have significantly more investable assets ($737,000 for owners vs. $512,000 for non-owners), according to the Cogent report.
Pulling out the nugget about about the average of ETF owners being 48 compared to the average age of non-owners being 56 years old, reveals that the average ETF is owner is a GenXer. After all, "millennial" is defined as up to 34 years old, while Baby Boomers are currently 51+.
And no, no one should scoff at the importance of Millennials to the current and future growth of the ETF industry. Recent data confirm as much.
Millennials Are Still Important, But...
Released in late September, Schwab's 2015 ETF Investor Study, the company's fifth iteration of the study, shows that millennials are embracing ETFs more widely than other generations.
The prominence of ETFs within an overall investment strategy is particularly pronounced among younger ETF investors. Millennials (aged 25-35) say that ETFs currently make up an average of 41 percent of their portfolios, compared to a 21 percent share among all investors. Sixty-one percent of Millennials plan to increase their investments in ETFs in the next year, according to the Schwab study.
Still, the Cogent data, on an issuer-by-issuer basis, are telling about how important Gen X is to ETF issuers.
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Don't Overlook Gen X
For example, only First Wave Baby Boomers outpace Gen X in terms of ownership of iShares and SPDR ETFs. Those are the largest and third-largest U.S. ETF issuers, respectively. At Invesco Ltd. (NYSE:IVZ) PowerShares, the fourth-largest U.S. ETF issuers, 28 percent of ETF owners are GenXers, outpacing First Wave Boomers, the Silent Generation and Millennials by at least 25 percent.
Gen X represents 44 percent of Vanguard ETF owners, more than triple the issuer's penetration into the Millennial demographic and more than double the ownership of Vanguard ETFs by either First or Second Wave Boomers, according to Cogent data.
Gen X also represents the largest demographic for the following ETF titans: WisdomTree Investments, Inc. (NASDAQ:WETF), Fidelity, PIMCO and Schwab. Only First Trust, Guggenheim and ProShares show Millennials as a majority, or plurality in the case of ProShares, as their largest demographics.
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