(Bloomberg) — Wall Avenue prognosticators are inclined to huddle across the consensus, afraid to face out for concern of being fallacious. Then there’s Tom Lee.
The chief funding officer at Fundstrat Capital has made his title with daring calls (the S&P 500 at 15,000; Bitcoin to $10 million). His unabashedly bullish takes, for which he makes no apologies, have drawn legions of on-line followers on this anything-goes period of market hypothesis — fueled by do-it-yourself retail traders.
Now, the previous JPMorgan Chase & Co. strategist is trying to money in on his renown with a brand new exchange-traded fund, the Granny Pictures US Giant Cap ETF (ticker GRNY), which launched earlier this month and has already raked in additional than $400 million. It’s the primary of what he hopes can be many to comply with.
The fund’s title, just like the checklist of fairness suggestions Lee has offered purchasers since 2019, is derived from an unconventional basketball free-throw fashion he likens to his systematic, theme-based stock-picking course of. It might not look the good, Lee says, nevertheless it has the best probability of success.
“Our purchasers and their loyalty and the truth that we’re nonetheless rising actually quickly as a analysis agency isn’t just as a result of we’re bulls,” Lee stated in an interview, including the agency has a devoted institutional following as nicely. “It’s as a result of we’ve given them many causes to grasp why markets ought to do what they’re doing.”
The ETF is off to a robust begin. GRNY is up 2.2% since its early November launch, in comparison with a 0.2% advance for the S&P 500 over the identical span. Its $412 million of inflows places it within the high 10% of fund debuts this 12 months based mostly on velocity of asset accumulation, in response to information compiled by Bloomberg Intelligence.
Nonetheless, GRNY is launching amid a troublesome run for inventory pickers. Roughly two-thirds of enormous cap managers have underperformed the S&P 500 this 12 months by means of the top of October, information from Strategas Analysis present. In reality, greater than half of lively managers have trailed the benchmark in 14 of the final 15 years.
Thematic ETFs have additionally fallen out of favor just lately, with outflows in 9 out of 10 months this 12 months by means of October, Bloomberg Intelligence information present.
That gained’t deter Lee. GRNY relies on 4 longer-term themes, together with easing monetary circumstances and world labor suppliers, and three shorter-term ones like seasonality and magnificence tilt. Shares that aligned with two or extra of the themes are included within the fund. Meta Platforms Inc. falls into 5 themes, for instance, whereas Google father or mother Alphabet Inc. and Garmin Ltd. match into 4.
“It’s not a black field course of,” stated Lee, who added that he and his staff have obtained constructive suggestions for his or her transparency. “Granny Pictures is giving individuals a extremely good understanding of why they’re proudly owning this.”
High holdings embrace police and navy tools producer Axon Enterprise Inc., Tesla Inc. and CrowdStrike Holdings Inc. The fund, which consists of some 35 shares, can be rebalanced quarterly. The themes, too, are dynamic.
Being perennially bullish doesn’t at all times repay, after all. Each 2018 and 2022 have been troublesome years for threat belongings and, in flip, Lee’s optimistic outlook.
But final 12 months his S&P 500 forecast was the most accurate amongst greater than 20 Wall Avenue strategists tracked by Bloomberg because the gauge superior 24%. This 12 months is prone to be an identical story because the benchmark’s 26% advance has exceeded even essentially the most bullish estimates. He just lately instructed Bloomberg’s Odd Tons podcast that the S&P 500 might hit 15,000 by 2030.
In terms of Bitcoin, he’s been predicting the digital token would hit $100,000 since at least 2018. In February, he forecast the digital forex would attain $150,000 by year-end, primarily due to a supply-demand imbalance on account of a deliberate discount within the rewards miners obtain, and incoming president Donald Trump’s pledge to arrange a nationwide Bitcoin stockpile.
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Lee, who co-manages the fund with Ken Xuan, is the most recent in a rising checklist of outstanding economists and traders to launch ETFs, becoming a member of the likes of Nouriel Roubini, Analysis Associates’ Rob Arnott and others.
Nonetheless, it takes greater than only a recognizable title to launch a profitable fund, he stated. “I don’t suppose simply because somebody has a reputation that all of a sudden they will put out an ETF and it attracts belongings,” Lee stated.
Finally, the plan is for GRNY to be the primary of quite a few ETFs based mostly on Lee’s funding philosophy.
“We’re already planning a full section of what follows this one,” he stated.
