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Millennials key to future structural growth

Investment structural growth

Investors should look at trends driven by millennials as a guide to where investment market structural growth might be found in the future, a fund manager has said.

An investment management house has recommended investors look to millennials, the demographic group under 40,  and their preferences as a driver of structural growth in the future.

Aitken Investment Management chief investment officer Charlie Aitken said: “What is just starting in my view is this millennials versus baby boomers dissent. So we’ve structured our portfolio to favour millennials.

“They are driving growth in the world. Their behaviour and spending patterns and how they interact with companies is driving a lot of change.”

Aitken said the only sector he has identified as an exception to this approach is healthcare, where opportunities are still present due to the increasing cost of healthcare and its pricing power.

He predicts the increased influence of millennials, those born between 1981 and 1996, will make the next five years very interesting and illustrated his point by highlighting the shifting relevance of cash in retail transactions.

“If you think six years ahead, my children won’t use cash. So how are they going to pay for things? Through things like Apple Pay, Visa, Mastercard and PayPal. So there could be a cashless society by 2026,” he said.

“As such, we have holdings in Visa and Mastercard as that’s our play regarding a cashless society.”

He pointed out his position reflects the belief that if you get consumer sentiment right, you will get the markets right.

“Remember 75 per cent of America’s GDP (gross domestic product) is consumer spending, so you really have to focus on who is going to spend what on what,” he noted.

“We try to think about what goods and services millennials are going to purchase and what goods and services baby boomers are going to purchase, and try to set a portfolio that way to represent the excess demand for those products,” he said.

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