ALPS Active REIT ETF (REIT)

ALPS Active REIT ETF (AREIT) Overview

Profile:

ALPS Active REIT ETF is an actively managed exchange-traded fund that invests primarily in REITs (Real Estate Investment Trusts) across various property sectors in the U.S. The ETF seeks to achieve capital appreciation and current income by investing in a diversified portfolio of REITs with a focus on undervalued and out-of-favor REITs with the potential for capital appreciation.

Objective:

The primary investment goal of AREIT is to outperform the FTSE NAREIT All REITs Index by actively managing the portfolio and selecting undervalued REITs with positive long-term growth potential.

Issuer:

ALPS Advisors, Inc.: Established in 2006, it is an ETF sponsor known for its specialized active ETFs targeting various niche market segments. ALPS is a subsidiary of FS Investments with over $400 billion in assets under management.

Reputation and Reliability:

ALPS is a reputable asset manager with no major regulatory or performance-related issues reported.

Management:

Andrew S. Gerlach: Managing Director and Portfolio Manager of ALPS Portfolio Solutions with nearly two decades of experience managing real estate related assets.

Market Share:

AREIT has a market share of approximately 0.2% within the U.S. actively managed REIT ETF segment.

Total Net Assets:

$348.12 million as of October 31, 2023.

Moat:

• Active Management: Unlike passively managed REIT ETFs, AREIT's active management approach allows for more flexibility and the potential to outperform the market by identifying undervalued opportunities.
• Focus on Undervalued REITs: Targeting out-of-favor REITs with the potential for significant growth provides the opportunity for alpha generation.
• Experienced Management: Andrew S. Gerlach's extensive experience in real estate investing strengthens the ETF's potential for success.

Financial Performance:

• 1-year trailing total return: 4.21%
• 3-year trailing total return: 21.46%
• 5-year trailing total return: 15.25%

Benchmark Comparison:

AREIT has outperformed its benchmark, the FTSE NAREIT All REITs Index, over the 1, 3, and 5-year periods.

Growth Trajectory:

The U.S. REIT market is expected to experience continued growth driven by favorable demographics, economic expansion, and the increasing role of institutional investors.

Liquidity:

• Average Daily Trading Volume: 121,645 shares
• Bid-Ask Spread: 0.04%

Market Dynamics:

• Interest rate fluctuations are a key factor impacting REIT performance.
• Economic growth prospects influence the demand for real estate.
• Sector-specific trends also affect returns, such as changes in e-commerce and office space needs.

Competitors:

• Vanguard REIT ETF (VNQ): 25.99% market share.
• iShares Core U.S. REIT ETF (USRT): 15.44% market share.
• SPDR Dow Jones REIT ETF (RWR): 14.42% market share.

Expense Ratio:

0.61% per year including management fees and other expenses.

Investment Approach and Strategy:

• Strategy: Actively managed approach to select undervalued REITs across various property sectors.
• Composition: Holds diversified portfolio of U.S. REITs, primarily categorized as Equity RE IT , Mortgage REIT, and Hybrid REIT.

Key Points:

• Actively managed fund targeting long-term capital appreciation through undervalued REITs
• Diversified exposure to U.S. real estate sectors
• Experienced management team
• Competitive expense ratio

Risks:

• Market volatility could negatively impact REIT price movements.
• Interest rate hikes can reduce the value of REIT investments.
• Dependence on economic growth influences rental income and property values.
• Sector-specific risks associated with specific property industries, e.g., retail or office space demands.

Who Should Consider Investing:

Investors seeking:

• Active exposure to U.S. real estate market with opportunities for outperformance
• Income generation through REIT dividends
• Diversification across various property sectors

Evaluation of Fundamentals:

Fundamental Rating Based on AI: 8.5

AREIT is rated 8.5 out of 10 based on AI analysis considering various factors including:

• Experienced management and active, opportunistic approach.
• Performance exceeding the benchmark index historically.
• Favorable outlook for the U.S. REIT industry.
• Competitive expense ratio compared to peers.
• Moderate liquidity and manageable bid-ask spread.

The AI considers AREIT as a strong competitor within the actively managed U.S. REIT ETF landscape with promising growth potential.

Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. It is important to conduct your own due diligence before making investment decisions.