GRNJ: A High-Potential Thematic Play on Small- and Mid-Cap Growth in 2026

The U.S. equity market is entering a pivotal phase in 2026, shaped by a dovish Federal Reserve, shifting macroeconomic dynamics, and the accelerating adoption of artificial intelligence (AI). Against this backdrop, the Fundstrat Granny Shots US Small- & Mid-Cap ETF (GRNJ) emerges as a compelling vehicle for investors seeking exposure to small- and mid-cap growth stocks aligned with structural megatrends. By combining active management, thematic investing, and a disciplined approach to portfolio construction, GRNJ is uniquely positioned to capitalize on the opportunities created by a Fed easing cycle and the broader economic transition toward innovation-driven sectors.

Strategic Alignment with 2026 Macro Themes

GRNJ's investment strategy is rooted in identifying companies that align with key macroeconomic and demographic themes, a framework that has gained renewed relevance in a dovish Fed environment. As of Q4 2025, the fund's portfolio reflects a focus on sectors such as industrials, information technology, and energy-industries poised to benefit from the AI-driven infrastructure boom and the energy transition. For instance, the fund's top holdings include Albemarle Corporation (ALB) in materials, AeroVironment, Inc. (AVAV) in industrials, and Lumentum Holdings (LITE) in information technology, all of which are tied to the physical infrastructure demands of AI and clean energy.

The dovish Fed's rate-cutting trajectory, which began in December 2025, is expected to amplify the appeal of these sectors. Lower borrowing costs will reduce the discount rates applied to long-term cash flows, making capital-intensive industries like industrials and utilities more attractive. This aligns with GRNJ's thematic focus on AI infrastructure and energy transition, as highlighted by Fundstrat Capital's research, which identifies "industrial AI" and "energy infrastructure" as two of the most compelling themes for 2026.

Active Management and Thematic Flexibility

GRNJ's active management approach is a critical differentiator in a market where passive strategies may lag in capturing thematic opportunities. The fund employs a top-down, rules-based process to identify stocks aligned with at least two of the portfolio managers' key themes, followed by a bottom-up quantitative screening to ensure quality and momentum metrics. This dual-layer strategy allows GRNJ to adapt to evolving macroeconomic conditions while maintaining a disciplined focus on growth.

For example, the fund's Q4 2025 portfolio includes Bloom Energy Corporation (BE) and BWX Technologies (BWXT), both of which are positioned to benefit from the rising demand for clean energy and nuclear power-a sector directly supported by the U.S. government's AI Action Plan, which emphasizes grid modernization and dispatchable energy sources. Similarly, Hims & Hers Health (HIMS) and United Therapeutics (UTHR) in healthcare reflect the fund's exposure to innovation-driven growth in a sector trading at a historical discount to the broader market.

The Federal Reserve's pivot toward monetary easing has created a favorable backdrop for small- and mid-cap stocks, which are historically more sensitive to interest rate changes than their large-cap counterparts. As of November 2025, small-cap equities were trading at significant discounts to their 20-year averages, offering attractive valuations in a low-rate environment. GRNJ's equal-weighted, quarterly rebalanced structure ensures that the fund can capitalize on this dynamic without being overly concentrated in any single stock.

Moreover, the fund's sector allocations are strategically aligned with the Fed's dovish stance. The industrials sector, which constitutes a substantial portion of GRNJ's holdings, is expected to benefit from reduced financing costs and increased capital expenditures in AI infrastructure. Energy stocks, including Cameco Corporation (CCJ) and Weatherford International (WFRD), also stand to gain from the Fed's support for long-term growth sectors as noted in Fundstrat's portfolio analysis.

Conclusion: A Thematic Play with Active Management Edge

GRNJ's strategic positioning against macro themes-coupled with its active management approach-makes it a high-potential play for investors seeking to navigate the 2026 market landscape. By targeting small- and mid-cap companies aligned with AI, energy transition, and healthcare innovation, the fund is well-placed to outperform in a dovish Fed environment. As the U.S. economy transitions from speculative growth to tangible infrastructure and productivity-driven gains, GRNJ's thematic flexibility and disciplined portfolio construction offer a compelling edge for long-term capital appreciation.