APRZ provides S&P 500 exposure with built-in downside protection and upside caps that reset annually each April. It's designed for investors who want equity participation but can't stomach full market drawdowns.
How It Works
The fund uses a defined outcome strategy through options on SPY — buying at-the-money calls while selling out-of-the-money calls and puts to create a collar. This structure typically protects against the first 10-15% of losses while capping gains around 15-20%. The exact parameters reset each April based on market conditions and volatility pricing.
Key Features
- Downside buffer resets annually in April with fresh protection levels
- No expense ratio makes it cheaper than most structured products or annuities
- 3.6% yield from options premium provides income while waiting for appreciation
Risks
- Upside cap means missing out on gains beyond ~15-20% in strong years
- Protection only kicks in after initial losses — first 5-10% still hurts
- Buying mid-cycle means inheriting partially depleted buffers and caps
Who Should Own This
Best for pre-retirees or conservative investors who need equity exposure but would panic-sell in a 20% drawdown. Works well as a bond alternative in low-rate environments or as 20-30% of an equity sleeve for investors scarred by 2008. Not for anyone under 40 who should be buying dips instead of avoiding them.