Hello, ETF fans! Today, we’re taking a closer look at a strategy that’s been gaining significant attention: Tom Lee’s “Granny Shots” portfolio, now available as the Fundstrat Granny Shots US Large Cap ETF (Ticker: GRNY).
With many well-known strategists launching their own ETFs, it’s a great time to go beyond the marketing materials and use powerful analytics to see what’s really driving these funds. Using the ETF Action platform, we’ll dissect the GRNY portfolio to understand its holdings, compare it to major benchmarks, and uncover what makes it unique.
Let’s dive in.
Setting the Stage: How Does GRNY Compare?
To get a clear picture of where GRNY fits in the market, we started by comparing it against three well-known ETFs:
- QQQ (Invesco QQQ Trust): A proxy for the Nasdaq-100.
- SPY (SPDR S&P 500 ETF Trust): The benchmark for the broad US large-cap market.
- ARKK (ARK Innovation ETF): A baseline for actively managed, thematic innovation strategies.
Right away, our derived analytics reveal some interesting characteristics. While all four are classified as US Large Cap Growth, the similarities start to diverge from there.
- Sector Diversification: SPY, ARKK, and GRNY are all “Sector Diversified,” meaning their top three sectors make up less than 75% of the portfolio. In contrast, QQQ is “Sector Concentrated,” heavily tilted towards technology.
- Market Cap Tilt: Not all “large-cap” funds are created equal. A look at the weighted average market cap of each portfolio tells a fascinating story:
- SPY: $1.3 Trillion
- QQQ: $1.7 Trillion (Heavily weighted to mega-cap giants)
- ARKK: $348 Billion (Tilts smaller, while still in the large-cap space)
- GRNY: $736 Billion (Sits right in the middle—a clear mega-cap tilt, but less concentrated at the very top than SPY and QQQ).
Overlap Analysis: How Unique is GRNY?
A key question for any new ETF is whether it’s just repackaging the same stocks you already own. Our Fund Overlap tool shows that GRNY offers a distinct composition.
When compared to GRNY:
- QQQ has a 34% overlap across 20 holdings.
- SPY has a 30% overlap across 38 holdings.
- ARKK has a 15% overlap across just 7 holdings.
Crucially, only six companies are held across all four ETFs. This tells us that GRNY is carving out its own path rather than simply mirroring existing indexes or popular growth strategies.
A Spotlight on the GRNY ETF
Since its launch in November of last year, GRNY has seen impressive growth, now standing at $3 billion in assets under management (AUM). The fund has experienced consistent and significant inflows month after month, signaling strong investor confidence.
This confidence appears well-placed. Since its inception, GRNY has delivered some nice alpha relative to its benchmark, the iShares Russell 1000 Growth ETF, returning 26% versus the benchmark’s 19.5%.
Under the Hood: What’s Inside the Portfolio?
Using our Portfolio Visualizer tool, we can examine the 39 companies that currently make up the GRNY portfolio. Here are the key takeaways:
1. A Nearly Equal-Weight Construction
Unlike market-cap-weighted indexes where a few names dominate, GRNY employs a strategy that is very close to an equal-weight construct. The position sizes are remarkably similar across the board, providing broad diversification among its chosen names.
2. Surprising Sector Bets
Relative to its large-cap growth benchmark, GRNY is making some bold active bets. It currently has:
- An underweight to Information Technology.
- A significant overweight (17.8%) to Industrials.
- A notable overweight to the Financials sector.
Even within financials, holdings like Robinhood (HOOD) represent a clear technology-forward approach.
3. A Focus on Quality and Profitability
When analyzing growth-oriented portfolios, it’s essential to check their underlying fundamentals. Here, GRNY stands out with a distinct “quality tilt.”
- Profitability: Of its 39 holdings, all but one were profitable over the last 12 months based on net income.
- Valuation: Its forward P/E ratio (31x) is right in line with the broad-based benchmark.
- Margins: A look at profitability ratios reveals that the companies in the portfolio generate very healthy gross and net margins.
The Verdict
Our deep dive reveals that the Fundstrat Granny Shots ETF (GRNY) is far more than just another large-cap growth fund. It’s a thoughtfully constructed portfolio with several defining features:
- Diversified Growth: It provides exposure to growth but in a more diversified manner than traditional market-cap-weighted indexes.
- Unique Sector Allocation: Its underweight to tech and overweight to industrials and financials sets it apart from its peers.
- Quality Tilt: The focus on highly profitable, high-margin companies gives it a quality characteristic not always found in thematic growth funds.
Ultimately, the “US Large Cap Growth” classification fits perfectly, but with a unique flavor that investors are clearly finding attractive.
Want to perform your own analysis? Create an account at ETF Action and explore our powerful suite of tools to go under the hood of any ETF.
The information provided in this article is for informational and educational purposes only and should not be considered investment advice or a recommendation to buy or sell any security. All investments involve risk, and past performance is not a guarantee of future results. You should conduct your own research and consult with a qualified financial professional before making any investment decisions. The author and ETF Action are not responsible for any investment decisions, damages, or other losses resulting from or related to the use of this information.
