Tom Lee, managing companion and head of analysis at Fundstrat World Advisors, talking on CNBC’s “The Alternate” on Oct. 31, 2023.
Adam Jeffery | CNBC
Tom Lee’s Fundstrat Capital rose to prominence with well timed macroeconomic calls available on the market, and now his new ETF is flexing the agency’s inventory choosing prowess.
The Fundstrat Granny Photographs US Giant Cap ETF (GRNY) is rapidly rising as one of the common and profitable lively inventory funds of the yr. The fund hit $1.5 billion in property beneath administration simply eight months after its launch final November, quickly rising in an business the place some funds take years to achieve 10% of that degree.
Efficiency has additionally been glorious to date in comparison with friends and a benchmark index. The fund has outperformed the MSCI USA Giant Cap Index since inception, 13.7% to 7.8%, in accordance with FactSet. Measured by Morningstar, the fund’s return of about 14% this yr is within the prime three p.c in its class, which incorporates practically 1,400 different funds.
This Fundstrat ETF is outperforming most of its friends and the broader market in 2025.
“It is positively been a constructive shock as a result of we all know how crowded the area is. … This product actually appears to be connecting with folks, and from the feedback we have acquired … folks have been shopping for it repeatedly, so they are not doing it as a one-time speculative buy,” Lee advised CNBC concerning the fund’s development.
The “granny shot” within the title is a reference to capturing a basketball free throw underhanded. For Fundstrat, it means a inventory that falls beneath a number of key funding themes which the agency is monitoring that drive earnings development. These themes embody power and cyber safety, an AI-category referred to as world labor suppliers, and the affect of millennials.
“The technique could not look flashy — however it’s grounded in a disciplined, rules-based course of designed to extend the probability of constant outcomes over time,” the fund’s web site says.
The result’s a portfolio of about 35 S&P 500 shares, rebalanced each three months. Prime holdings at present embody Robinhood, Oracle and Superior Micro Units.
Choosing shares that fall beneath a number of themes helps the fund get up beneath altering market moods, Lee mentioned.
“A inventory that is each an AI story and tied to millennials then has a greater likelihood of outperforming, as a result of at any second AI might not be in favor, however millennials may, so that you’re enhancing your possibilities of steady outperformance,” Lee mentioned.
The following step will likely be sustaining the outperformance over the long-term, which has tripped up many star fund managers previously. Lee mentioned he believes the concentrate on long-term traits and earnings development provides this technique endurance.
“I believe the concept of utilizing a thematic method and occupied with the story arcs that final a very long time to seek out the shares [that] outperform, I believe that is what’s actually resonated with us. I believe that’s how one can nonetheless outperform,” Lee mentioned.
The Granny Photographs fund has an expense ratio of 0.75%.
Disclosure: Tom Lee is a CNBC contributor.
