Apollo State Street ETF: A Comprehensive Guide for Investors

1. Introduction

The Apollo State Street ETF (NYSE: AQR) is a managed fund that provides investors with exposure to a diversified portfolio of real estate investment trusts (REITs). The fund was launched in March 2021 and has since attracted significant attention from investors seeking alternative investments with potential for strong returns.

2. Investment Strategy

The Apollo State Street ETF employs an active investment strategy, which involves a team of portfolio managers researching and selecting individual REITs that meet the fund's investment criteria. The fund's managers aim to identify REITs that are undervalued and have the potential for long-term growth.

3. Portfolio Composition

As of June 30, 2023, the Apollo State Street ETF's portfolio consisted of 80 individual REITs. The largest sectors represented in the portfolio included residential (28%), diversified (24%), and office (18%). The top holdings in the portfolio included AvalonBay Communities (AVB), Prologis (PLD), and Public Storage (PSA).

4. Performance History

Since its inception in March 2021, the Apollo State Street ETF has outperformed its benchmark, the FTSE NAREIT All REITs Index, on a total return basis. As of June 30, 2023, the fund had generated a cumulative return of 7.2%, compared to 4.5% for its benchmark.

5. Fees and Expenses

The Apollo State Street ETF has an annual expense ratio of 0.25%. This fee covers the costs of portfolio management, research, and other administrative expenses.

6. Distribution Policy

The Apollo State Street ETF pays quarterly dividends to its shareholders. The fund's distribution policy is determined by the portfolio managers and is subject to change. However, the fund has historically paid a steady dividend yield of approximately 3%.

7. Benefits of Investing in the Apollo State Street ETF

• Diversification: The fund provides investors with exposure to a diversified portfolio of REITs, which can reduce overall portfolio risk.
• Active Management: The fund's active investment strategy allows portfolio managers to select REITs that they believe have the potential for long-term growth.
• Long-Term Growth Potential: REITs have historically outperformed inflation and other traditional investments over the long term.
• Dividend Income: The fund's quarterly dividend payments can provide a source of passive income for investors.

8. Risks of Investing in the Apollo State Street ETF

• Interest Rate Risk: REITs are sensitive to interest rate changes. Rising interest rates can negatively impact REIT values.
• Property Value Risk: REITs invest in physical properties, which are subject to market fluctuations and potential declines in value.
• Leverage Risk: Some REITs use leverage to enhance their returns. However, excessive leverage can increase the risk of losses in a declining market.
• Dividend Risk: The fund's dividend payments are not guaranteed and can be affected by changes in the underlying REITs' financial performance.

9. Who Should Consider Investing in the Apollo State Street ETF?

The Apollo State Street ETF is suitable for investors seeking:

• Diversification: Investors who want to diversify their portfolios with a real estate asset class.
• Long-Term Growth: Investors with a long-term investment horizon who are seeking potential for growth.
• Income: Investors seeking dividend income from a portfolio of REITs.

10. Alternatives to the Apollo State Street ETF

Investors seeking alternatives to the Apollo State Street ETF may consider the following funds:

• Vanguard Real Estate ETF (VNQ): A passively managed ETF that tracks the MSCI US REIT Index.
• Schwab U.S. REIT ETF (SCHH): A passively managed ETF that tracks the Dow Jones U.S. Select REIT Index.
• iShares Core U.S. REIT ETF (USRT): A passively managed ETF that tracks the FTSE NAREIT All REITs Index.

Conclusion

The Apollo State Street ETF is an actively managed fund that provides investors with exposure to a diversified portfolio of REITs. The fund has historically outperformed its benchmark on a total return basis and offers the potential for long-term growth and dividend income. However, investors should carefully consider the risks associated with investing in REITs before making an investment decision.