Like the “granny shot” in the game of basketball, the Fundstrat Granny Shots ETF (GRNY) is doing something seldom seen these days in the ETF world — it amassed over $2 billion in assets in less than nine months. Its growth trajectory is already making it one of the fastest-growing ETFs ever.
The “granny shot” fell to the wayside because its underhand shooting form can be blocked by a defender easily. In a competitive ETF game that’s hungry for investor capital, nothing has been blocking GRNY from getting inflows. Behind the fund is Tom Lee, a well-known figure in finance for his bullish predictions on Bitcoin and other bold calls on the market, while leveraging social media outlets.
Following the Active Trend
Lee’s foray into the world of ETFs reflects the current trend of the space — active management. More ETF providers are turning to active management, which allows the fund managers to adjust the holdings. That’s differentiated from a passive fund, where investors are subjected to whims of the index that it tracks. The result is a more hands-on approach by the managers of the fund, allowing for tailored exposure to match current market conditions.
Overall, investors will have to pay more for that flexibility with higher expense ratios, but they have been coming down, making them more competitive in terms of price versus their passive peers. As it stands, GRNY’s expense ratio is 0.75%, which is higher than the FactSet segment average of 0.61%. Often times, newer funds have to do this in order to offset costs, unlike the larger BlackRocks of the world with war chests full of assets.
To stand out from the ETF crowd, it takes more than just a unique name. The fund’s strategy must also be aligned with capturing and maximizing alpha.
Unique Name, Unique Research
Lee is also the founder of research firm Fundstrat, leveraging both qualitative and quantitative methodologies to make predictions on the market. Wit that, it’s expected that this level of research firepower would go into the fund’s holdings.
Per the fund’s product website, GRNY uses a strategy that is more than likely shaped by Lee’s research philosophy. The fund looks at fundamentals from the top-down paired with a bottom-up approach that leans on quantitative analysis. The byproduct of that strategy is two categorical stock themes: short-term holdings (a 6- to 12-month horizon) and long-term holdings (a 3- to 5-year horizon).
From those two larger themes come various sub-themes. These include themes driven by style tilt, millennial behavior, seasonality, and specific economic conditions, among others.
“GRNY’s performance reflects the strength of our disciplined, theme-based process,” said Fundstrat portfolio manager Ken Xuan in a press release. “By aligning the portfolio with long-term macro trends—such as demographics, technological innovation, and monetary policy—while being mindful of near-term signals like PMI recovery and style or industry rotation, we aim to deliver durable results for investors.”
So Far, a Slam Dunk
And what about performance thus far? So far, the Granny Shots ETF has been a slam dunk. It’s up almost 17% through the end of July, which easily bests the S&P 500.
Its popularity doesn’t appear to be waning. July’s inflows continued as its cumulative flows continue to trend higher.
The uniqueness also applies to the fund’s investor communication. ETFs already have a level of transparency that outshines their mutual fund counterparts, but Fundstrat takes it to another level with GRNY with weekly videos.
“Many GRNY holders tell us they appreciate the videos as they give them a clear idea of how we are making investment decisions,” Lee said.
Fundstrat’s case could be a marketing lesson to other fund providers. To garner investor capital, it certainly takes more than a creative name and a solid fund strategy.
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