Tom Lee’s Fundstrat Granny Shots ETF is making waves—and not just for its quirky name inspired by NBA legend Rick Barry’s underhand free throw. This actively managed ETF is carving out a distinctive niche by blending thematic investing with rigorous financial discipline, and it’s delivering results that every investor should be watching closely.
Why Granny Shots ETF Is More Than Just a Gimmick
The ETF’s name might sound playful, but the strategy is anything but. Tom Lee’s approach is rooted in a philosophy of “making 90% of the shots” by investing in stocks that fit at least two of Fundstrat’s seven long-term themes—ranging from millennials and Gen Z to energy and sovereign security. This dual-theme filter ensures the fund isn’t hanging its hat on a single, potentially fleeting idea. Instead, it targets companies with durable, multi-dimensional growth drivers.
What’s more, Lee emphasizes quality: the ETF invests only in companies generating earnings and boasting high Return on Invested Capital (ROIC). This blend of thematic insight and financial rigor is a key differentiator in a crowded ETF market where many thematic funds chase hype without fundamentals.
The Next Big Themes: Sovereign Security and Gen Z
Lee is now spotlighting two emerging themes that are poised to reshape markets over the next decade:
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Sovereign Security: The pandemic and geopolitical tensions have accelerated a shift toward supply chain resilience within national borders. Lee sees this as a structural change, not a short-term blip. For investors, this means looking beyond traditional global supply chains to companies that are localizing production and securing critical infrastructure. This could benefit sectors like domestic manufacturing, cybersecurity, and defense technology.
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Gen Z: Just as millennials powered market growth when Fundstrat began thematic research seven years ago, Gen Z is now emerging as the new engine of consumption and innovation. Lee suggests evolving the demographic theme to focus on younger cohorts, including Gen Alpha. For investors, this means paying close attention to companies that resonate with these generations—think digital natives, sustainable brands, and tech platforms shaping new consumer behaviors.
Performance That Speaks Volumes
Since its November 2022 launch, Granny Shots ETF has not only crossed the $1 billion assets under management milestone but has grown to $1.3 billion as of early July 2024. Its performance is equally impressive—up 13% year-to-date, outpacing the S&P 500’s roughly 7% gain over the same period. This outperformance underscores the potential of combining thematic investing with active management and quality filters.
Top holdings like Robinhood, Oracle, and AMD reflect the fund’s commitment to innovation and strong fundamentals. Robinhood captures the retail trading revolution, Oracle represents enterprise tech resilience, and AMD is at the forefront of semiconductor innovation—a critical sector in the new tech-driven economy.
What This Means for Investors and Advisors
The success of Granny Shots highlights a broader trend noted by ETF expert Dave Nadig: actively managed ETFs with thematic overlays are gaining traction. Investors are increasingly demanding funds that don’t just track themes blindly but apply expert stock selection and risk management.
Actionable Insights:
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Advisors: Incorporate thematic ETFs like Granny Shots into client portfolios to capture long-term secular trends while maintaining quality standards. Use these funds as a complement to traditional core holdings, not a replacement.
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Investors: Look beyond headline themes and scrutinize the underlying fundamentals. Favor funds that apply multi-theme filters and emphasize earnings and ROIC to avoid “junky” stocks.
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Portfolio Strategy: Consider reallocating a portion of growth capital toward themes like sovereign security and Gen Z-focused companies. These areas are underappreciated by the broader market but have strong tailwinds driven by geopolitical shifts and generational change.
What’s Next?
Expect Fundstrat and other thematic investors to deepen their focus on younger demographics and supply chain sovereignty. For example, companies involved in reshoring manufacturing or developing next-gen digital platforms for Gen Z could be the next big winners.
A recent Deloitte report highlights that 70% of Gen Z prefer brands with strong social responsibility and local footprint—factors that dovetail perfectly with Lee’s themes. This intersection of social values and economic nationalism could redefine sector leadership in the coming years.
Final Takeaway
Tom Lee’s Granny Shots ETF is more than a clever name—it’s a blueprint for how thematic investing should evolve. By combining multi-theme rigor, quality stock selection, and active management, it offers a compelling model for capturing the next decade’s market leaders. Investors and advisors who adapt to these insights now stand to gain a meaningful edge.
For those seeking to stay ahead of the curve, the message is clear: embrace thematic investing—but do it with discipline, a multi-dimensional lens, and an eye on emerging generational and geopolitical shifts. Granny Shots is showing us how to do just that—and the results speak for themselves.
Source: Basketball-inspired Granny Shots ETF may add two new themes: Tom Lee