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Millennials Poured Into ETFs In February

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March 21, 2017 8:23 am
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Investors poured $47 billion into U.S.-listed exchange-traded products, including exchange-traded funds, last month. That brought U.S. ETF assets to another record assets under management tally of $2.758 trillion. Millennial investors are proving to be big drivers of U.S. ETF growth.

Net flows to ETFs courtesy of millennials increased at annualized rate of 26 percent in February, according to TD Ameritrade Holding Corp. (NASDAQ:AMTD) data. That easily outpaces the still impressive annualized growth rates of flows to ETFs by baby boomers and Gen X of 14 percent and 12 percent, respectively.

“ETF net flows increased at an annualized rate of +24 percent in January/February vs. +13 percent in November/December and compared with +19 percent in the twelve months prior to November,” according to TD Ameritrade.

Previously released data, including a survey from BlackRock, illustrate millennials' increasing use of ETFs.

“The survey also reveals that one in four investors already use ETFs, and that these investors tend to be younger, more engaged in managing their finances, and optimistic about their financial futures than the overall investment population. More than 8 in 10 (82 percent) of financial advisors currently use ETFs in the portfolios they manage,” said BlackRock in a statement.

New York-based BlackRock is the world's largest asset manager and parent company of iShares, the world's biggest ETF sponsor.

Data also suggest that among various generations, millennials are most engaged with ETFs, though millennials and Gen Xers actively sought additional ETF education last year.

Follow The Money

Perhaps in a sign of preparation for a market pullback, Gen X and millennial investors allocated new money to alternative and inverse ETFs last month, said TD Ameritrade.

At the sector level, “financials saw a large positive upswing starting in October and continuing through the end of the calendar year, with net flows of 15 percent of assets under management in November and December,” said TD Ameritrade. “The move was particularly pronounced among Boomers and Millennials, with Millennials maintaining the positive momentum through February.”

While selling of defensive sectors has abated among other generations, millennials have been persistent sellers of lower beta sectors, underscoring their bias for cyclical fare such as financial services and industrial names, according to TD Ameritrade.

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