My favorite chartbook to go through is my Thematic ETF watchlist. It’s a great way to find obscure subsectors or areas of the market that are exhibiting strength but not getting much mainstream investor love. From Mobile Payments to Online Retail, Cannabis, Blockchain, Robotics and more… there are a plethora of niche industries that are generating positive and negative alpha these days and plenty of exchange-traded vehicles to utilize to express bullish or bearish theses on them.
There are also some downright silly ETFs that try to target specific demographics or interests of investors. Most of these just represent repackaged Index Funds in my opinion and thus are pretty worthless. But there is one that’s piqued my curiosity since its inception due to its stellar performance and diverse mix of high quality holdings. It is the Millennials Thematic ETF, $MILN and as a proud Millennial with a birthday this week, I though it an appropriate time to write a post on the topic.
MILN is unlike many Thematic ETFs which simply track the major indices and have many of the same largest holdings. The chart below shows the performance of MILN and the S&P 500 ($SPY) in the top pane as well as a ratio chart of MILN vs SPY in the bottom pane.
MILN has outpaced the S&P 500 by nearly 30% since its inception. The relative strength from MILN is best depicted by the ratio chart in the bottom pane which shows it stair-stepping from one new all-time high to the next since breaking out above 0.082 in Q1 of this year.
The absolute chart looks just about the same… Prices broke to new all-time highs in Q1, successfully retested former resistance and didn’t hit oversold during May’s correction, and then surged back to record highs in June. Price has continued to grind higher in July and closed at fresh highs again today.
MILN is one of the top performing Thematic ETFs on my watchlist on a year-to-date basis, trailing only some of the strongest ETFs on the market such as Mobile Payments ($IPAY), IPOs ($IPO), Genomics ($ARKG) and Fintech ($FINX). So, what are the components that are driving this strength? The attribution tables and scatterplot below detail the individual components, sectors and industry groups that have contributed the most gains to the ETF over the trailing 12-months.
Notice the diversity in holdings, from defensive stocks like Costco ($COST) and REITs ($EQR & $AVB) to high-beta tech names in hot industries such as Mobile Payments ($PYPL), Software ($INTU) and Fintech ($FISV). There are also some of the most popular and recognizable consumer brands among MILN’s top holdings. These names include Starbucks ($SBUX), Disney ($DIS), Chipotle ($CMG), Lululemon ($LULU), Match ($MTCH & $IAC) and Netflix ($NFLX).
While MILN itself is not actionable at current prices, many of its holdings are among some of the strongest stocks in the market and currently offer favorable reward/risk setups. So, add MILN to your watchlist and make sure to look through its components every now and then. You’ll be surprised at what you might find. And next time you see someone taking jabs at Millennials on Twitter, just show them a chart of MILN and remind them we may actually be good for something after all as many of our favorite companies are riding record highs.
I hope you enjoyed this post. Please feel free to reach out to me directly at Strazza@TheChartReport.com with any questions or comments.