Tom Lee, managing accomplice and head of analysis at Fundstrat International Advisors, talking on CNBC’s “The Trade” 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 selecting prowess.
The Fundstrat Granny Shots US Large Cap ETF (GRNY) is rapidly rising as some of the widespread and profitable lively inventory funds of the yr. The fund hit $1.5 billion in belongings underneath administration simply eight months after its launch final November, quickly rising in an trade the place some funds take years to succeed in 10% of that stage.
Efficiency has additionally been wonderful thus far in comparison with friends and a benchmark index. The fund has outperformed the MSCI USA Massive Cap Index since inception, 13.7% to 7.8%, in line with FactSet. Measured by Morningstar, the fund’s return of about 14% this yr is within the prime three % 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 undoubtedly been a optimistic shock as a result of we all know how crowded the house is. … This product actually appears to be connecting with folks, and from the feedback we have acquired … folks have been shopping for it often, so they don’t seem to be doing it as a one-time speculative buy,” Lee informed CNBC concerning the fund’s progress.
The “granny shot” within the title is a reference to taking pictures a basketball free throw underhanded. For Fundstrat, it means a inventory that falls underneath a number of key funding themes which the agency is monitoring that drive earnings progress. These themes embody vitality and cyber safety, an AI-category referred to as international labor suppliers, and the influence of millennials.
“The technique might not look flashy — but it surely’s grounded in a disciplined, rules-based course of designed to extend the probability of constant outcomes over time,” the fund’s website says.
The result’s a portfolio of about 35 S&P 500 shares, rebalanced each three months. High holdings at the moment embody Robinhood, Oracle and Advanced Micro Devices.
Selecting shares that fall underneath a number of themes helps the fund get up underneath altering market moods, Lee stated.
“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 will not be in favor, however millennials may, so that you’re enhancing your possibilities of steady outperformance,” Lee stated.
The subsequent step shall be sustaining the outperformance over the long-term, which has tripped up many star fund managers up to now. Lee stated he believes the concentrate on long-term traits and earnings progress offers this technique endurance.
“I feel the thought of utilizing a thematic strategy and fascinated by the story arcs that final a very long time to seek out the shares [that] outperform, I feel that is what’s actually resonated with us. I feel that’s how one can nonetheless outperform,” Lee stated.
The Granny Photographs fund has an expense ratio of 0.75%.
Disclosure: Tom Lee is a CNBC contributor.