Tom Lee Plans 2 New ETFs, Takes Aim at JEPI With New Income Fund
After the runaway success of GRNY, Tom Lee is expanding his ETF lineup with small-cap and covered call strategies.
Tom Lee isn’t done taking shots. The high-profile strategist and frequent CNBC guest is expanding his ETF lineup after his debut fund turned into one of the biggest hits of the past year.
The Fundstrat Granny Shots US Large Cap ETF (GRNY) only launched last November, but it’s already pulled in $2.1 billion of inflows, with assets climbing to $2.3 billion once you tack on price appreciation.
Investors have been drawn in by a strategy that blends Lee’s market views with quantitative screens, producing returns that have topped the S&P 500.
GRNY gained 15.4% in the year-to-date period through Aug. 21, beating the Vanguard S&P 500 ETF (VOO)’s 9.2% return by a wide margin. Since inception, it’s up 14.2% versus 7.8% for the S&P 500 fund. 
Inside The Granny Shots Strategy
The “Granny Shots” approach is designed to capture multiple tailwinds at once. Lee and his team identify themes they believe will drive markets. Everything from macroeconomic shifts and monetary policy changes to demographics, industrial trends, technology adoption, and the business cycle.
Some are short-term, like seasonality and PMI [Purchasing Managers Index] recoveries. Others are longer-term, like energy security, cybersecurity, the rise of millennials, and easing financial conditions. Stocks that line up with at least two of those themes are considered candidates, then narrowed down through quantitative screens to produce the final portfolio.
The end result is an equal-weighted basket of 20 to 50 names. As of now, GRNY holds 39 stocks, including Palo Alto Networks, Axon Enterprise, Monster Beverage, Live Nation, JPMorgan Chase, Costco, Alphabet, Netflix, Goldman Sachs, and Meta. The fund charges 0.75% in expenses.
Taking Aim At Small & Mid Caps
The combination of Lee’s star power, strong performance, and a distinctive strategy has turned GRNY into one of the fastest-growing active equity ETFs on the market. Now he’s looking to press the advantage with two more filings: the Fundstrat Granny Shots US Small- & Mid-Cap ETF and the Fundstrat Granny Shots US Large Cap & Income ETF.
The small- and mid-cap fund takes the same playbook down the size spectrum. According to the filing, it defines small- and mid-capitalization U.S. companies as those in the bottom 15% of the market by market capitalization.
As of Aug. 13, that means companies worth $25 billion or less. The fund will likely hold a bigger, more diversified basket than GRNY, with 20 to 200 names.
The Income Play
The income fund, meanwhile, invests in large caps but changes the mandate. Here, income generation comes first, with capital appreciation secondary. Large-cap stocks are defined as those in the top 85% of the U.S. equity market, or companies worth more than $25 billion.
What sets it apart from GRNY, which also invests in large cap stocks, is the use of option-writing strategies. According to the filing, the new fund will actively choose among different option strategies based on its market outlook, with the goal of hitting the fund’s income target while still allowing for some upside. Covered calls were cited as one of the strategies the fund may employ.
It’s a notable pivot into one of the hottest, and most polarizing, segments of the ETF industry. Covered call products like JPMorgan Equity Premium Income ETF (JEPI) have exploded in popularity.
But critics argue they leave too much on the table by capping gains in strong markets without providing real protection when stocks tumble. One hedge fund manager recently described them as a way to “farm retail investors.”
Lee, looking to build on his early ETF success, is clearly leaning into that trend. Whether investors follow him into small caps and covered calls the way they did into GRNY will be the real test of whether Granny Shots was a one-off hit or the start of an ETF franchise.
