Would Granny Shots (GRNY) ETF Work For Retirement?

One of the benefits of fintech apps and the appeal to Gen-Z and trading on sites like RobinHood is a greater awareness and urgency from the younger generation on the subject of retirement. Thanks to the popularity of DIY investing and the spread of trends like FIRE (Financial Independence Retire Early), that share tips and expound upon vehicles for retirement account  wealth building. 

Unlike retirees, whose emphasis is more on actual income to cover living expenses, younger investors’ retirement accounts are focused on growth. Whether it be through capital appreciation or a DRIP program deployed to compound dividends, IRA and 401-K portfolio growth is at the top of their agenda, and any new security or ETF that helps to further that goal appears on their radars.

Granny Shot Growth

Although the conventional overhead free throw is overwhelmingly more popular for its aesthetics, the Granny Shot free throw is statistically more accurate and more consistent – something that GRNY also strives to achieve.

One of the most impressive debuts of late in the realm of large-cap growth ETFs has been the amusingly named Fundstrat Granny Shots US Large Cap ETF (NYSEARCA: GRNY).  It  is the brainchild of maverick equities analyst Tom Lee, who analogously named the fund for its unconventional, yet effective approach towards portfolio management. The Granny Shot is an underhanded basketball free throw technique that has fallen into disuse due to its lack of aesthetics. Although it is presently reserved for children and elderly players who lack the strength to shoot a conventional overhand free throw, its accuracy and consistency rate still beats the latter statistically. 

Similarly, GRNY has an unconventional methodology behind its stock selections, including some criteria for analysis that most Wall Street peers ignore, dismiss, or deride. Nevertheless, results matter. As of August 29th. GRNY was boasting a year-to-date return rate of 18.75%, according to Portfolioslab. The level of support for Fundstrat has exploded, with over $2 billion inflows in only its first 9 months. 

Tom Lee’s History of Bucking The Trend

Tom Lee’s warnings about Nextel’s accounting inconsistencies ruffled feathers in 2002, but he was proven right when the Nextel acquisition by Sprint became the biggest disaster in telecom merger history.

A Michigan native and Wharton graduate, Fundstrat founder Tom Lee is the son of Korean immigrant parents whose professions may have influenced his career as an equities analyst-turned ETF issuer: his father is a psychiatrist and his mother is a franchise owning entrepreneur. 

Lee has spent over 20 years on Wall Street as an equities analyst. Starting at Kidder, Peabody and Solomon Smith Barney, he soon took a prominent role at JP Morgan Chase. After years of seeing the cozy relationships between public companies and Wall Street analysts, Lee began displaying a stubborn independent streak in 2002. He released an analysis report of Nextel, posing a number of inconvenient questions that hinted at accounting irregularities and misleading metrics that obscured transparency.  In response, Nextel wrote a scathing rebuttal in The Wall Street Journal to do damage control, but failed to address the questions and accounting inconsistencies posed by Lee. Nextel’s subsequent merger with Sprint validated Lee’s analyses: the deal went down in history as the most disastrous acquisition in the telecom industry. 

Lee left JP Morgan in 2014 to start Fundstrat Capital. Taking cryptocurrencies seriously way before the majority of his Wall Street peers, Tom Lee became the first Wall Street analyst to, in 2017,  publicly go on record in analyzing Bitcoin (BTC) . At the time, Bitcoin had hit $2,450. He projected a 5-year price target of $55,000.  Lee’s comfort in public appearances and willingness to answer random audience questions both in person and online rapidly expanded  his reputation among cryptocurrency and DIY equity investors. Therefore, some pockets of the investment community were already excited when news of Fundstrat’s first ever ETF would be launched in Q4 2024. But even Lee himself has expressed amazement at the huge response, although less so at GRNY’s sterling performance. 

Granny Shots Nuts and Bolts

At 2.83%, Palo Alto Networks is the largest single holding in GRNY.

As an actively managed ETF, the GRNY portfolio is subject to change without notice. 

Rather than attempting to replicate and track an index with a couple of tweaks, GRNY rethinks the ETF approach in several ways:

• Comparable to the underhanded Granny Shot free throw, GRNY stock selection qualification requires the stock to fall under a number of off-the-wall and unconventional  investment themes that Fundstrat has identified as growth drivers.
• Qualifying stocks must align with at least two (2) themes identified in the investment themes to warrant portfolio inclusion. 
• There are three short term (6-12 month) themes: Style Tilt, Seasonality, and PMI Recovery.
• The four long term (3-5 year) themes are: Energy/Cybersecurity, Millennials Impact, Global Labor Suppliers (an AI parameter), and Easing Financial Conditions.
• The multiple themes concept is designed to choose sufficiently diverse growth stocks that will supply a portfolio with resilience against a range of potentially adverse news events.
• Qualifying in more than two themes does not necessarily lead to greater portfolio weighting for any particular stock, as additional criteria is used for that determination.  
• The portfolio is limited to roughly 35-40 S&P 500 stocks that meet the Fundstrat multiple investment theme parameters. It is rebalanced every quarter.

The top 10 largest holdings in GRNY at the time of this writing are:

• Palo Alto Networks: 2.83% (4 themes)
• American Express: 2.79% (2 themes)
• Alphabet Inc. Class A (Google): 2.71% (4 themes)
• Expedia Group: 2.67% (2 themes)
• Live Nation Entertainment: 2.66% (2 themes)
• Tesla, Inc.: 2.69% (2 themes)
• JP Morgan Chase: 2.66% (2 themes)
• Garmin Ltd.: 2.66% (3 themes)
• Bank of New York Mellon: 2.64% (2 themes)
• GE Aerospace: 2.62% (2 themes)

The rationale behind multiple theme drivers for a selected stock is to ensure good odds of continued support, in case the trend or narrative hits a speed bump. For example, if a stock appeals to both Millennials and AI followers, the chances of interest from both sectors waning is considerably smaller than if only one or the other.

Beating The Competition

Like a pair of MMA fighters, GRNY and one of Vanguard’s more aggressive growth ETFs match up against each other on an A/B comparison.

Vanguard Funds’ John Bogle is the founder of the index fund, although, ironically, he allegedly detested ETFs because he thought they encouraged unwarranted speculation. Nevertheless, Vanguard has issued some of the most popular ETFs in the industry, and its Vanguard S&P 500 ETF (NYSEARCA: VOO | VOO Price Prediction), at $1.33 trillion in assets, is the largest ETF in the world. 

The Vanguard S&P Growth Index Fund ETF Shares (NYSE: VOOG) tracks the S&P 500 Growth Index. It is one of Vanguard’s higher return ETFs, although its higher volatility and risk factor renders its suitability only for those with higher risk tolerances. 

Since VOOG has a 15-year history vs. only 8-9 months for GRNY, a comparison of like criteria is the only way to determine if GRNY deserves to join the growth ETF club for prospective retirement accounts. 

Head-to-Head (quotes based on market at time of this writing)

VOOG Top 10 largest holdings:

• Nvidia: 14.91%
• Microsoft: 7.09%
• Meta Platforms (Facebook): 5.77%
• Apple: 4.90%
• Broadcom: 4.75%
• Amazon: 4.41%
• Alphabet Class A (Google): 3.84%
• Tesla: 2.97%
• Visa: 2.03%

Granny Shots For Granny’s IRA?

GRNY’s lack of dividends probably would not appeal to grandmothers of retirement age seeking income, but for younger grandmothers who still have 15 or more years of gainful employment, GRNY can be a big wealth building portfolio contributor.

At 18.75% year-to-date return, even subtracting the 0.75% expense ratio from GRNY, it still has 4.3 points over VOOG,’s 13.45% which is roughly +30%.  From a trading liquidity perspective, GRNY also has a 13X advantage, with 3 million shares trading daily on average compared to VOOG’s 227,393. 

However, VOOG has an enviable longer term track record that GRNY has yet to match or surpass: 25.51% (1Y), 19.74% (3Y), 16.38% (5Y), 15.79% (10Y). Be that as it may, GRNY certainly has captured the attention of many investors and at least some of those allocations are  being placed in their IRAs. 

According to Tom Lee, he confirmed that the bulk of the buying is for long-term accumulation, and mentioned as such on a CNBC interview:

“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.”

Given that GRNY has not declared a dividend to date, it’s likely to be deemed unsuitable for retirees relying upon investment income for their household and personal expenses. However, as an agent of wealth building, GRNY certainly appears to have what it takes to enhance and multiply value in a portfolio seeking growth. FIRE fans can now reference how it stacks up with some well established growth ETFs in the short term while monitoring it for the long haul.