Tom Lee, managing accomplice and head of analysis at Fundstrat World Advisors, talking on CNBC’s “The Change” 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 Pictures US Massive Cap ETF (GRNY) is rapidly rising as one of the vital widespread and profitable lively inventory funds of the 12 months. The fund hit $1.5 billion in belongings 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 stage.
Efficiency has additionally been glorious to date 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 accordance with FactSet. Measured by Morningstar, the fund’s return of about 14% this 12 months is within the high 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 constructive shock as a result of we all know how crowded the house is. … This product actually appears to be connecting with individuals, and from the feedback we have acquired … individuals have been shopping for it often, so they are not doing it as a one-time speculative buy,” Lee instructed CNBC in regards to the fund’s progress.
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 progress. These themes embrace power and cyber safety, an AI-category referred to as world labor suppliers, and the affect of millennials.
“The technique could 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 web site says.
The result’s a portfolio of about 35 S&P 500 shares, rebalanced each three months. Prime holdings at present embrace Robinhood, Oracle and Superior Micro Gadgets.
Choosing shares that fall beneath a number of themes helps the fund get up beneath 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 is probably not in favor, however millennials would possibly, so that you’re bettering your probabilities of steady outperformance,” Lee stated.
The following step might be sustaining the outperformance over the long-term, which has tripped up many star fund managers previously. Lee stated he believes the concentrate on long-term traits and earnings progress offers this technique endurance.
“I believe the concept of utilizing a thematic strategy and eager about the story arcs that final a very long time to search 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 stated.
The Granny Pictures fund has an expense ratio of 0.75%.
Disclosure: Tom Lee is a CNBC contributor.