Preface

Market strategist Tom Lee from Fundstrat is contemplating the inclusion of two groundbreaking themes for his Granny Shots US Large Cap ETF. During a segment of CNBC's "ETF Edge," he highlighted the potential introduction of sovereign security as a critical theme. Over recent times, the trend of companies mending their supply chains within their borders has become prominent, suggesting a long-term shift. This article delves into Lee's forward-thinking approach to identifying investment opportunities and his focus on generational trends like Gen Z, making it vital for investors to stay informed.

Lazy bag

Tom Lee explores sovereign security and Gen Z as key themes, revealing his innovative strategies for Fundstrat's Granny Shots ETF, designed to capture significant investment trends.

Main Body

Tom Lee, an esteemed market strategist, has consistently maintained a bullish outlook on market trends through his Fundstrat Granny Shots US Large Cap ETF. Known for identifying emerging themes, Lee is now setting his sights on two pivotal areas: sovereign security and generational trends, particularly focusing on Gen Z. In a recent appearance on CNBC's "ETF Edge," Lee articulated his vision, emphasizing the changing dynamics within corporate supply chains. The drive towards securing supply chains within sovereign borders marks a transformative shift that Lee argues will not be a transient phase but a substantial, long-term movement.

Further, Lee draws parallels between Gen Z and millennials, with the latter having been identified as a significant market force when his firm began thematic research. With millennials proving to be market engines, the focus is gradually shifting towards younger generations like Gen Z and eventually Gen Alpha. Lee's strategic adaptation aligns with demographic shifts and economic potential of these cohorts, ensuring the ETF remains responsive to evolving market dynamics.

The concept of Lee's Granny Shots ETF finds its roots in the legendary underhanded free-throw style of NBA icon Rick Barry. Lee’s approach suggests that selecting the best stocks in each theme might not create as impactful an effect as a diversified strategy analogous to Barry's unique yet effective throw. Such an approach remains foundational to the ETF's philosophy.

Lee’s investment strategy is built upon seven themes that Fundstrat predicts will dominate market narratives over the next decade. The focus spans from demographic trends to energy security, ensuring diversified exposure. Stocks qualifying as a 'granny shot' must overlap with at least two of the identified themes, prioritizing companies that not only promise high returns on invested capital (ROIC) but also generate robust earnings. This quarterly rebalancing schedule efficiently filters out underperforming stocks, maximizing portfolio performance.

Since its inception on November 7, the Granny Shots ETF has witnessed impressive growth, crossing the $1 billion asset management milestone early on and currently valued at $1.3 billion. Demonstrating resilience, the ETF has delivered a robust 13% increase since its launch, outperforming the S&P 500 throughout this year.

Top holdings, as of July 3, include high-performance stocks like Robinhood, Oracle, and AMD. Independent ETF expert Dave Nadig highlights the rising popularity of active management styles. He acknowledges Tom Lee’s significant contribution to this trend, underscoring the appeal and clarity offered by actively managed thematic overlays as a sound investment strategy.

Key Insights Table