Apollo Global Management reclassified as value stock triggers forced ETF selling

Apollo Global Management has been removed from the Russell 1000 Growth Index and reclassified as a value stock following the annual index reconstitution effective June 26. The reclassification was driven by the index provider’s algorithms, which determined the alternative asset manager no longer exhibited the characteristics of a growth stock. Consequently, the firm was added to the Russell 1000 Value Index.

The reclassification triggered immediate forced selling by growth-focused exchange-traded funds, specifically the iShares Russell 1000 Growth ETF and the Vanguard Russell 1000 Growth ETF. These funds collectively hold significantly more assets than the value-focused ETFs to which Apollo was added, including the iShares Russell 1000 Value ETF and the Vanguard Russell 1000 Value ETF. The disparity in capital flows contributed to a sharp decline in Apollo’s share price, which is now trading at approximately $120 per share.

Apollo’s stock has declined by 18% year-to-date, with a notable drop occurring immediately after the rebalancing took effect. While the firm was added to value ETFs with combined assets of roughly $101 billion, the outflow from the growth funds, which hold over $171 billion in combined assets, created a net negative impact on capital inflows. This mechanical selling pressure has overshadowed the company’s recent operational performance.

Despite the market sell-off, Apollo reported record first-quarter fee-related income of $728 million, representing a 30% increase year-on-year. Adjusted net income rose 8% to $1.2 billion during the same period. The company’s private equity, private debt, and alternative investment assets demonstrated low correlation to broader stock markets, contributing to the strong quarterly results. Wall Street analysts project revenue growth of 21% in 2026 and 14% in 2027, with earnings expected to rise 6% this year and 20% in 2027.

Investor sentiment has been mixed due to recent redemption caps. Apollo implemented a 5% redemption cap for the second consecutive quarter, citing high redemption requests of 16.8% for its flagship Apollo Debt Solutions fund. This move followed a June 22 Securities and Exchange Commission filing and reflected heightened concerns among investors regarding the private credit market. Nevertheless, approximately 73% of Wall Street analysts rate the stock as a buy, with a median price target of $150 per share, implying 25% upside from current levels.