An investor cannot invest directly in an index and index performance does not reﬂect the deduction of any fees, expenses or taxes.
Barclays US MBS Index covers the mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). BofA Merrill Lynch Adjustable Rate Preferred Securities Index tracks investment grade ﬂoating rate preferred securities publicly issued in the U.S. domestic market. BofA Merrill Lynch Australia Corporate Index tracks the performance of AUD-denominated investment grade corporate, securitized and collateralized debt publicly issued in the Australian domestic market. BofA Merrill Lynch Canada Corporate Index tracks the performance of CAD-denominated investment grade corporate, securitized and collateralized debt publicly issued in the Canadian domestic market. BofA Merrill Lynch Capital Securities Index is a subset of the BofA Merrill Lynch U.S. Corporate Index including all fixed-to-ﬂoating rate, perpetual callable and capital securities. BofA Merrill Lynch Corporate Master Index tracks the performance of USD-denominated investment-grade corporate debt publicly issued in the U.S. domestic market. BofA Merrill Lynch Contingent Capital Index tracks the performance of investment grade and below investment grade contingent capital debt publicly issued in major domestic and euro-bond markets. BofA Merrill Lynch Fixed-Rate Preferred Securities Index tracks the performance of fixed-rate USD-denominated preferred securities issued in the U.S. domestic market. BofA Merrill Lynch HighYield Master Bond Index monitors the performance of below investment grade USD-denominated corporate bonds publicly issued in the U.S. domestic market. BofA Merrill Lynch Japan Corporate Index tracks the performance of JPY denominated investment grade corporate, securitized and collateralized debt publicly issued in the Japanese domestic market. BofA Merrill Lynch Municipal Master Index tracks the performance of USD-denominated investment-grade tax-exempt debt publicly issued by U.S. states and territories, and their political subdivisions, in the U.S. domestic market. BofA Merrill Lynch REIT Preferred Securities Index is a subset of the BofA Merrill Lynch Fixed-Rate Preferred Securities Index including all real estate investment trust issued preferred securities. BofA Merrill Lynch US Composite Agency Index tracks the performance of US dollar denominated investment grade US agency debt issued in the US domestic market. BofA Merrill Lynch U.S. Inﬂation-Linked Treasury Index tracks the performance of U.S. Treasury Inﬂation Protected Securities with at least $1 billion in outstanding face value and a remaining term to maturity greater than one-year. BofA Merrill Lynch US Treasury Index tracks the performance of US dollar denominated sovereign debt publicly issued by the US government in its domestic market. 10-year Treasury is a debt obligation issued by the U.S. Treasury that has a term of more than one year, but not more than 10 years. The S&P 500 Index is an unmanaged index of 500 large-capitalization, publicly traded stocks representing a variety of industries.
The views and opinions in the preceding commentary are as of the date of publication and are subject to change without notice. This material represents an assessment of the market environment at a specific point in time, should not be relied upon as investment or tax advice, is not intended to predict or depict performance of any investment and does not constitute a recommendation or an oﬀer for a particular security. We consider the information in this presentation to be accurate, but we do not represent that it is complete or should be relied upon as the sole source of suitability of investment. Investors should consult their own advisors with respect to their individual circumstances. There is no guarantee that any historical trend illustrated herein will be repeatable in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that a market forecast in this commentary will be realized.
Data quoted represents past performance, which is no guarantee of future results. There is no guarantee that any historical trend illustrated in this commentary will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that a market forecast made in this commentary will be realized.
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 calling 800 330 7348. Please read the summary prospectus and prospectus carefully before investing.
Risks of Investing in Preferred Securities
Investing in any market exposes investors to risks. 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 diﬀer 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. Throughout this commentary, we make comparisons of preferred securities to corporate bonds, municipal bonds and 10-Year Treasury bonds. It is important to note that corporate bonds sit higher in the capital structure than preferred securities, and therefore in the event of bankruptcy, will be senior to the preferred securities. Municipal bonds are issued and backed by state and local governments and their agencies, and the interest from municipal securities is often free from both state and local income taxes. 10-Year Treasury bonds are issued by the U.S. government and are generally considered the safest of all bonds since they’re backed by the full faith and credit of the U.S. government as to timely payment of principal and interest.
Below-investment-grade securities or equivalent unrated securities generally involve greater volatility of price and risk of loss of income and principal, and may be more susceptible to real or perceived adverse economic and competitive industry conditions than higher-grade securities. The benchmarks do not contain below-investment-grade securities.
Contingent capital securities (sometimes referred to as “CoCos”) are debt or preferred securities with loss absorption characteristics built into the terms of the security, for example a mandatory conversion into common stock of the issuer under certain circumstances, such as the issuer’s capital ratio falling below a certain level. Since the common stock of the issuer may not pay a dividend, investors in these instruments could experience a reduced income rate, potentially to zero, and conversion would deepen the subordination of the investor, hence worsening the investor’s standing in a bankruptcy. Some CoCos provide for a reduction in the value or principal amount of the security under such circumstances. In addition, most CoCos are considered to be high yield or “junk” securities and are therefore subject to the risks of investing in below-investment-grade securities.
Duration Risk. Duration is a mathematical calculation of the average life of a fixed-income or preferred security that serves as a measure of the security’s price risk to changes in interest rates (or yields). Securities with longer durations tend to be more sensitive to interest rate (or yield) changes than securities with shorter durations. Duration diﬀers from maturity in that it considers potential changes to interest rates, and a security’s coupon payments, yield, price and par value and call features, in addition to the amount of time until the security matures. Various techniques may be used to shorten or lengthen the Fund’s duration. The duration of a security will be expected to change over time with changes in market factors and time to maturity.
This commentary must be accompanied by the most recent Cohen & Steers Preferred Securities and Income Fund or Cohen & Steers Low Duration Preferred and Income Fund fact sheet if used in connection with the sale of mutual fund shares.
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. Cohen & Steers U.S. registered open-end funds are only available to U.S. residents.
Cohen & Steers UK Limited is authorized and regulated by the Financial Conduct Authority (FRN 458459). Cohen & Steers Japan, LLC, is a registered financial instruments operator (investment advisory and agency business with the Financial Services Agency of Japan and the Kanto Local Finance Bureau No. 2857) and is a member of the Japan Investment Advisers Association.