Fundstrat’s ETF Making Waves in the Market
On October 31, 2023, Tom Lee, who manages at Fundstrat Global Advisors, discussed notable developments in the market during a segment on CNBC’s “The Exchange.”
Lee’s investment strategy has garnered attention, especially with the recent performance of his new exchange-traded fund (ETF). The FundStrat Granny Shot U.S. Large Cap ETF (GRNY) is quickly becoming a standout in the active equity landscape this year. After launching last November, the fund has accumulated over $1.5 billion in assets in just eight months — quite impressive, considering that many funds typically require years to achieve a fraction of that.
In terms of performance, the GRNY ETF has outperformed both its peers and the broader market. FactSet reports that the fund boasts a return of 13.7%, significantly eclipsing the 7.8% return of the MSCI USA Large Cap Index since its inception. Additionally, Morningstar ranks its nearly 14% return this year in the top 3% among around 1,400 comparable funds.
Lee expressed some pleasant surprise at the fund’s reception, noting how competitive the market can be. He mentioned the “Granny Shot,” a playful nod to basketball, suggesting the fund capitalizes on major investment trends — including shifts in energy, cybersecurity, and AI sectors influenced by millennials.
While the strategy may not seem flashy, it relies on a structured, rule-based process aimed at achieving consistent long-term results. The portfolio focuses on about 35 S&P 500 stocks, which are rebalanced quarterly. Prominent holdings include companies like Robinhood, Oracle, and Advanced Micro Devices.
Lee believes that selecting stocks aligned with these significant themes will help the fund navigate evolving market conditions. He noted that stocks related to both AI and millennial interests are more likely to excel, suggesting that this thematic approach could yield ongoing success.
Looking ahead, Lee aims for the fund to maintain a long-term outperformance, much like other successful fund managers have done in the past. He emphasized that a thematic approach, considering broader narratives, will be crucial in identifying stocks that can outperform the market.
The fund has a cost ratio set at 0.75%.
