Cohen & Steers, Inc have announced the launch of the Cohen & Steers SICAV Short Duration Preferred Income Fund. This is the firm’s second fund focused on the preferred securities market available to UCITS investors, in addition to the Cohen & Steers SICAV Preferred Income Fund, launched in 2017.
With some of the highest yields in fixed income, preferred securities offer several key benefits, including the potential for high and stable income, portfolio diversification and low correlation to the fixed income universe. Preferreds act like bonds, paying a fixed or floating rate of income, but are a form of equity for issuers that lie between common stock and senior debt in a company’s capital structure. They are generally issued by large, regulated companies with relatively stable cash flows, such as banks, insurance companies, utilities and other sectors that are less represented in other fixed income strategies.
Elaine Zaharis-Nikas, head of fixed income and preferred securities, said: “We see significant opportunities in the $1.2 trillion preferred securities market driven by attractive market fundamentals, including an increase in new issuance from institutional, over-the-counter preferreds and contingent capital securities. Recent methodology changes from select rating agencies have also spurred new issuance from non-financial companies, improving the diversification of the preferred securities universe. Overall, we are optimistic about preferreds’ return potential and the appeal of short duration strategies.”
The Fund seeks to provide investors with high current income and capital preservation as a secondary objective through investments in the global preferred and debt securities universe with a focus on investment-grade, institutional preferreds. It offers a lower target duration of less than three years, though the duration may be longer depending on market conditions, and seeks to reduce portfolio interest rate sensitivity and manage volatility. The Fund is managed by Elaine Zaharis-Nikas, head of fixed income and preferred securities, and portfolio managers Jerry Dorost and Robert Kastoff.
David Conway, head of international wholesale distribution, added: “In an environment where income and quality matter more than ever, we’re excited to launch the Cohen & Steers SICAV Short Duration Preferred Income Fund to provide investors with access to a diversified portfolio of institutional preferred securities. We believe this fund is a compelling solution for investors seeking long-term total return through high and resilient income.”
As a global leader in actively managed preferred securities strategies, Cohen & Steers manages $18.3 billion in preferreds and has invested in the asset class since 2003.
