Granny Shots seems to be a rather unusual name for an ETF, at least in my view. Undoubtedly, if you’re not a basketball fan, you probably have no idea what the name of the ETF entails. In basketball, a granny shot is just an underhand free throw. If you tune into any NBA game, you’ll probably never see it being performed — not because it isn’t effective, but because it simply does not look “sexy” compared to the overhead free throw.
But in the world of investing, sexy isn’t always the answer. So let’s take a loot at two ETFs that are on opposite ends of that spectrum.
What Is the Granny Shots ETF?
As the name suggests, you’ll look like a granny taking a free throw. And while it’s hard not to giggle when someone throws a granny shot, it is, surprisingly, very effective, if not better than the way just about everyone shoots free throws. NBA legend Rick Barry scored a 89% free-throw rate, thanks in part to his granny shots. These are profoundly impressive stats that I think should convince just about everyone throwing granny shots.
Fundstrat’s head of research, Tom Lee, is a man who’s looking to follow the granny shot-style in the investment world. Indeed, his Fundstrat Granny Shots US Large Cap ETF (NYSEARCA:GRNY) looks to make the basket at all costs, regardless of how “unsexy” a shot (or stock pick) may seem on the surface. If you’ve tuned into CNBC, you’ve probably seen Tom Lee as a guest on a couple of occasions. He’s made several well-timed market calls over the years and his track record of calls, I think, warrants giving his Granny Shots ETF a closer look.
Underneath the hood, you’ll see many intriguing large-cap tech stocks that have done a lot of heavy lifting for the market averages. And while Tom Lee’s thematic approach to stock selection could give the S&P 500 and Nasdaq 100 a good run for their money, I do think prospective investors should dig into the holdings first. Let’s do just that, and I’ll chime in on whether I think Granny Shots has what it takes to be a slam dunk for investors or if it’s just better to stick with the tech-heavy, growth-focused Invesco QQQ Trust (NASDAQ:QQQ | QQQ Price Prediction).
Granny Shots US Large Cap ETF has a lot over the QQQ
Granny Shots has been a slam dunk for Tom Lee thus far, bringing in more than $2 billion in its first nine months on the market. And while the methodology is intriguing, the ETF needs more than just a few months (or even years) to prove itself as a better bet than something like the QQQ. Indeed, I’m a big fan of Tom Lee, as are many investors out there who have witnessed the man make the right calls at the right time. But that alone isn’t enough to justify the 0.75% adjusted expense ratio, which is quite pricier than an indexing solution such as the QQQ.
So, what goes in the Granny Shots ETF? First up, I have to remark on how well-diversified the ETF is, especially against the Nasdaq 100, which as you’re probably aware by now has too much weighting towards NVIDIA (NASDAQ:NVDA). With Granny Shots, no company has a weighting of more than 3% of the total portfolio, ensuring a good amount of diversification across the 40 or so hand-picked names.
What’s in the GRNY ETF?
Indeed, a big chunk (around 38%) of the portfolio is in tech stocks. Tom Lee, who’s a massive bull, has had big things to say about the AI revolution, after all. Additionally, there’s an 18% allocation in financials and industrials, providing far more sector diversification than even the S&P 500.
American Express (NYSE:AXP), which fits many themes that Lee and his team look for, is one of the larger holdings at the time of writing, as is Alphabet (NASDAQ:GOOG) and a number of Magnificent Seven stocks. What you won’t find, however, is NVIDIA, which I think sets GRNY apart from the Nasdaq 100, especially if an AI bubble bursts.
Though there is a lot of tech in the GRNY, it’s mature tech with modest valuations and limited semiconductor exposure. I expect that would prevent the fund from getting crushed in an AI-led correction. So, in short, I like what I see in GRNY and think it’s a better bet than the QQQ. Perhaps it’s better to shoot underhand with the ETF rather than indexing like so many investors are doing these days.
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