Tom Lee, managing partner and head of research at Fundstrat Global Advisors, speaking on CNBC's “The Exchange” on Oct. 31, 2023.
Adam Jeffery | CNBC
Tom Lee's Fundstrat Capital rose to prominence with timely macroeconomic calls on the market, and now his new ETF is flexing the firm's stock picking prowess.
The Fundstrat Granny Shots US Large Cap ETF (GRNY) is quickly emerging as one of the most popular and successful active stock funds of the year. The fund hit $1.5 billion in assets under management just eight months after its launch last November, rapidly growing in an industry where some funds take years to reach 10% of that level.
Performance has also been excellent so far compared to peers and a benchmark index. The fund has outperformed the MSCI USA Large Cap Index since inception, 13.7% to 7.8%, according to FactSet. Measured by Morningstar, the fund's return of about 14% this year is in the top three percent in its category, which includes nearly 1,400 other funds.
This Fundstrat ETF is outperforming most of its peers and the broader market in 2025.
“It's definitely been a positive surprise because we know how crowded the space is. … This product really seems to be connecting with people, and from the comments we've received … people have been buying it regularly, so they're not doing it as a one-time speculative purchase,” Lee told CNBC about the fund's growth.
The “granny shot” in the title is a reference to shooting a basketball free throw underhanded. For Fundstrat, it means a stock that falls under multiple key investment themes which the firm is tracking that drive earnings growth. Those themes include energy and cyber security, an AI-category called global labor suppliers, and the impact of millennials.
“The strategy may not look flashy — but it's grounded in a disciplined, rules-based process designed to increase the likelihood of consistent results over time,” the fund's website says.
The result is a portfolio of about 35 S&P 500 stocks, rebalanced every three months. Top holdings currently include Robinhood, Oracle and Advanced Micro Devices.
Picking stocks that fall under multiple themes helps the fund stand up under changing market moods, Lee said.
“A stock that's both an AI story and tied to millennials then has a better chance of outperforming, because at any moment AI may not be in favor, but millennials might, so you're improving your chances of continuous outperformance,” Lee said.
The next step will be sustaining the outperformance over the long-term, which has tripped up many star fund managers in the past. Lee said he believes the focus on long-term trends and earnings growth gives this strategy staying power.
“I think the idea of using a thematic approach and thinking about the story arcs that last a long time to find the stocks [that] outperform, I think that's what's really resonated with us. I think that is how you can still outperform,” Lee said.
The Granny Shots fund has an expense ratio of 0.75%.
Disclosure: Tom Lee is a CNBC contributor.
