As yield-constrained markets continue to frustrate income-focused investors, we designed an Alternative Income strategy to enhance and diversify portfolio income and total return sources.
- High, tax-advantaged monthly income and total-return potential
- Potentially lower-volatility approach
- Historically low sensitivity to traditional assets
- Convenience of one unified NAV, and one 1099 at tax time
Low yields across traditional income sources. Low-interest-rate policies from central banks worldwide have kept global bond income scarce for more than a decade. U.S. Treasury yields remain near all-time lows and more than $12 trillion of global fixed income is negative yielding.
Heightened macro uncertainties. The spread of COVID-19 has reversed global growth and driven extreme levels of market volatility. In this uncertain climate, it may be useful to expand investments into alternative, low-correlated asset classes to help navigate short-term market shocks.
High or dubious valuations. Valuations in most traditional bond markets have been pushed to new heights, while valuation multiples on stocks, particularly those not tied to real assets, are highly unreliable at present as analysts struggle for earnings clarity.
An Alternative Income Solution
An alternative income strategy can help address all three of these challenges. Income producing alternative assets (some of which are tax-advantaged) have the potential to produce higher-than-average returns compared to traditional fixed income securities, while expanding portfolio diversification to help enhance overall risk-adjusted return potential.
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Data quoted represents past performance, which is no guarantee of future results. This commentary is for informational purposes, and reflects prevailing conditions and our judgment as of this date, which are subject to change without notice. We consider the information in this commentary to be accurate, but we do not represent that it is complete or should be relied upon to determine if an investment is appropriate. There is no guarantee that any market forecast set forth in this commentary will be realized. Investors should consult their tax, legal and investment professionals with respect to their individual circumstances. This material should not be relied upon as investment advice, does not constitute a recommendation to buy or sell a security or other investment and is not intended to predict or depict performance of any investment. This material is not being provided in a fiduciary capacity and is not intended to recommend any investment policy or investment strategy or take into account the specific objectives or circumstances of any investor. The information presented above does not reflect the performance of any fund or other account managed or serviced by Cohen & Steers, and there is no guarantee that investors will experience the type of performance reflected above.
Please consider the investment objectives, risks, charges and expenses of any Cohen & Steers fund carefully before investing. A summary prospectus and prospectus containing this and other information may be obtained by visiting cohenandsteers.com or by calling 800 330 7348. Please read the summary prospectus and prospectus carefully before investing.
Diversification does not assure a profit nor protect against loss.
Risks of Investing in an Alternative Income Strategy. An alternative income strategy is subject to the risk that its asset allocations may not achieve the desired risk-return characteristic, underperform other similar investment strategies or cause an investor to lose money. In general, the risks of investing in preferred securities are similar to those of investing in bonds, including credit risk and interest-rate risk. As nearly all preferred securities have issuer call options, call risk and reinvestment risk are also important considerations. In addition, investors face equity like risks, such as deferral or omission of distributions, subordination to bonds and other more senior debt, and higher corporate governance risks with limited voting rights. Risks associated with preferred securities are different from risks inherent with other investments. In particular, in the event of bankruptcy, a company’s preferred securities are senior to common stock but subordinated to all other types of corporate debt. Risks of investing in REITs are similar to those associated with direct investments in real estate securities, including (i) property values may fall due to increasing vacancies, declining rents resulting from economic, legal, tax, political or technological developments, lack of liquidity, limited diversification and sensitivity to certain economic factors such as interest rate changes and market recessions. Securities of natural resource companies may be affected by events occurring in nature, inflationary pressures and international politics. Global infrastructure securities may be subject to regulation by various governmental authorities, such as rates charged to customers, operational or other mishaps, tariffs and changes in tax laws, regulatory policies and accounting standards. Foreign securities involve special risks, including currency fluctuation and lower liquidity. An investment in MLPs involves risks that differ from a similar investment in equity securities, such as common stock, of a corporation. Holders of equity securities issued by MLPs have the rights typically afforded to limited partners in a limited partnership. As compared to common shareholders of a corporation, holders of such equity securities have more limited control and limited rights to vote on matters affecting the partnership. There are certain tax risks associated with an investment in equity MLP units. MLPs are subject to significant regulation and may be adversely affected by changes in the regulatory environment, including the risk that an MLP could lose its tax status as a partnership.
Cohen & Steers Capital Management, Inc. (Cohen & Steers) is a registered investment advisory firm that provides investment management services to corporate retirement, public and union retirement plans, endowments, foundations and mutual funds. Cohen & Steers U.S. registered open-end funds are distributed by Cohen & Steers Securities, LLC, and are available only to U.S. residents.