EUR 850.00 For Business Accounts Only

Morningstar | CNS Company Report

We continue to be cautiously optimistic about Cohen & Steers, which has generated some of the strongest organic growth among the U.S.-based asset managers we cover the past five years. The company's long, successful track record of managing income-oriented equity portfolios (made up primarily of real estate securities), the depth of its distribution network (which has focused more heavily on broker/dealers and institutional investors), and the stickiness of its asset base should continue to serve it well. Solid investment performance and a reputation as a REIT specialist have made Cohen & Steers a "go to" firm for investors looking for real estate exposure. We believe Standard & Poor's decision to break out real estate from the financial services sector (creating a stand-alone real estate sector in the process) has forced many investors to maintain exposure to REITs and REIT-derived products, which should provide added stability to Cohen & Steers' AUM and help offset some of the industry pressures that active asset managers are facing (as REITs are generally viewed more as specialty products).Poor relative active investment performance and the growth of low-cost index-based products continue to make organic growth challenging for most active equity fund managers, leaving the group dependent on market gains to drive asset levels higher. Rising interest rates will only compound the problem for firms with large retail fixed-income platforms, as market losses on bonds will only amplify fund redemptions. With fees and performance under greater scrutiny, we believe that the industry is ripe for fee and margin compression as active asset managers are forced to narrow the spread between the management fees charged for their funds and fees being charged by index-based products, at the same time spending more heavily to improve performance and enhance distribution. While Cohen & Steers' niche positioning (and ability to generate organic growth) should mitigate some of these pressures, we expect the firm's operating leverage to be limited longer term by a need to spend more to maintain access to retail-advised platforms and institutional clients.