Tom Lee Expands ETF Lineup With Small-Cap and Income Funds, Targets JEPI’s Turf

Wall Street strategist Tom Lee isn’t slowing down. After launching one of the fastest-growing ETFs of the past year, he’s preparing to roll out two more funds aimed at new corners of the market.

His first product, the Fundstrat Granny Shots US Large Cap ETF (GRNY), only hit the market in November but has already become a standout. The fund has attracted about $2.1 billion in inflows, pushing total assets to $2.3 billion once gains are included. Investors have taken notice because GRNY blends Lee’s market calls with data-driven screens, a mix that has delivered results well ahead of the S&P 500.

So far this year, GRNY has climbed 15.4% through Aug. 21, far outpacing the 9.2% return of the Vanguard S&P 500 ETF (VOO). Since launch, it’s up 14.2% versus 7.8% for the S&P 500 tracker.

How the “Granny Shots” Method Works

Lee’s approach looks for stocks that benefit from more than one big trend at a time. His team screens for themes ranging from seasonal shifts and PMI recoveries to long-term forces like cybersecurity, clean energy, demographics, and easing financial conditions. Companies fitting at least two themes move forward, then a quantitative filter narrows the list.

The end product is an equal-weighted portfolio of 20–50 stocks. GRNY currently owns 39 names, including Palo Alto Networks, Axon Enterprise, Monster Beverage, Live Nation, JPMorgan, Costco, Alphabet, Netflix, Goldman Sachs, and Meta. The expense ratio is 0.75%.

Next Step: Small & Mid Caps

Building on that success, Lee is now pursuing two new funds. The first, the Fundstrat Granny Shots US Small- & Mid-Cap ETF, uses the same playbook but focuses on companies worth $25 billion or less (the bottom 15% of the U.S. market). Unlike the more concentrated GRNY, this one could hold 20 to 200 stocks, offering a broader basket of opportunities.

The Income Angle

The second new product changes the focus. The Fundstrat Granny Shots US Large Cap & Income ETF will stick with big companies (over $25 billion market cap) but put income generation ahead of growth.

The key difference? Options strategies. The fund plans to use tools like covered calls to produce steady payouts, while still leaving room for upside. That puts it head-to-head with one of the most popular income ETFs on the market — JPMorgan Equity Premium Income ETF (JEPI).

Covered-call ETFs have drawn billions but also plenty of criticism. Skeptics say they cap gains in bull markets and don’t provide much help in downturns. One hedge fund manager even called them a way to “farm retail investors.”

Still, by leaning into income and small-caps, Lee is clearly betting his Granny Shots brand can expand beyond its first hit. The real test will be whether traders who jumped on GRNY are ready to follow him into these next chapters.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in ETFs involves risks. Investors should carefully assess their investment objectives, risk tolerance, and conduct their own due diligence before making any investment decisions.