Millennials and Gen Z: Shaping the Future of Consumption and Investment

One of the key themes we’ve identified is the distinct spending habits of Millennials and Gen Z compared to their predecessors: Gen X and Baby Boomers. These younger generations prioritize experiences, healthier food choices, and a new category of luxury spending, such as athleisure wear. They also exhibit greater financial autonomy, often choosing to manage their own investments rather than relying on traditional asset managers or bank-provided products. 

In the United States, Millennials and Gen Z are particularly tech-savvy. They embrace new technologies both in the workplace and in their daily lives. These generations seek employment that aligns with a strong sense of purpose and is more willing to job-hop in pursuit of better opportunities. Flexibility, both in work arrangements and in the products they consume, are highly valued. As of recent data, Millennials make up approximately 36% of the U.S. workforce, with Gen Z close behind. 

One company we hold in the Lunar BCI Worldwide Flexible Fund, and in our offshore client’s portfolios, is Interactive Brokers. Interactive Brokers Group, Inc. operates as an automated electronic broker in the U.S. and internationally. The company facilitates the execution, clearance, and settlement of trades across a wide range of asset classes, including stocks, options, futures, forex, bonds, mutual funds, ETFs, precious metals, and cryptocurrencies.  

In its most recent quarterly results, Interactive Brokers reported revenue of $1.48 billion for Q2, up 20% year-over-year. Net income available to common stockholders rose 25% to $224 million. Of the total revenue, non-interest income, which includes execution and trading fees, was $620 million, reflecting a 42% increase year-over-year. Net interest income came in at $860 million, up 9% from the previous year. 

At Lunar Capital, we believe Interactive Brokers is well-positioned to benefit from the long-term trends driven by Millennials and Gen Z. However, we remain mindful of potential risks. A prolonged market downturn could discourage self-directed investors, and the competitive landscape – from both established players and innovative newcomers – could challenge the company’s ability to maintain and grow its market share.