Closed-End Fund
The strategy invests in a diversified portfolio of closed-end investment management companies, many of which may feature high current income and trade at discounts to net asset value. These closed-end funds (CEFs) typically invest in income-producing securities across varying regions, sectors, and asset classes.
WHY COHEN & STEERS
One of the largest mangers of closed-end funds, launched the nation's first fund of closed-end funds in 2006
Portfolio Manager has over 35 years of experience in the CEF industry
Unique understanding of the CEF market from institutional investor and issuer perspective
WHY CLOSED-END FUNDS
High income potential at attractive valuations
Investors can earn high current income, a portion of which may be tax advantaged. Additionally, closed-end funds have historically traded at average prices that represent a discount to their net asset values representing attractive entry points across sectors.
Alpha opportunities in an inefficient market
Research coverage of CEFs remains relatively scarce and market growth has widened this coverage gap. Together with minimal institutional participation in the CEF market, these factors create inefficiencies an experienced institutional manager can capitalize on.
Multiple levels of diversification potential
The CEF market contains over 400 individual funds offered by over 30 managers across all equity sectors and fixed-income markets. This provides opportunities for the active manager to diversify by manager, asset type, industry, and structure.
The Cohen & Steers Closed-End Fund Strategy seeks total return, consisting of high current income and potential capital appreciation. To achieve this goal, the strategy invests in a diversified portfolio of closed-end investment management companies, many of which may feature high current income and trade at discounts to net asset value. These closed-end funds typically invest in income-producing securities across varying regions, sectors and asset classes.
The $250 billion market cap of CEFs has more than tripled since 2000 as of 12/31/2022. The universe includes over 14 sectors spanning equity and fixed income markets with strategies from over 30 investment managers, providing a variety of investment choices to meet the needs of investors.
The combination of Cohen & Steers’ quantitative approach and research driven process for selecting closed-end funds is intended to produce a portfolio focused on total return that is allocated across multiple sectors, strategies, and managers. In selecting funds for the portfolio, we seek to identify funds that exhibit one or more of the following characteristics, among others:
- Strong fundamentals
- High current income
- Attractive valuation
- Sectors and asset class
- Manager reputation and track record
- Liquidity and market capitalization
WHY INVEST WITH US
Delivering value to our clients
Cohen & Steers understands the CEF market from the issuer and investor perspectives, providing a unique advantage to our investors. We are one of the largest issuers of closed-end funds with over $11.7 billion in assets under management and we manage portfolios of CEFs. Our portfolio manager, Doug Bond, has over 35 years of experience in the CEF industry and is regarded as one of the industry’s top experts.
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PORTFOLIO MANAGEMENT
An experienced team
We believe a managed solution of closed-end funds has the potential to increase total return and reduce the risk of individual closed-end investments while capitalizing on the compelling investment case for the closed-end fund structure.
Value add of an institutional investment approach
With market ownership dominated by retail investors, there is little institutional investment, limited research coverage and inconsistent focus from asset managers. This leads to an opportunity for professional active management to add value.
Yield advantage
Many closed-end funds offer a yield advantage over traditional stock and bond investments.
Attractive valuations
Closed-end funds often trade at a discount to their NAV, creating an attractive environment for investment.
Benefit from a consolidated managed solution
The opportunity to aggregate closed-end fund holdings into one managed strategy provides increased diversification with professional management and oversight while also maintaining the yield advantage and valuation opportunities of the structure. Professional management also allows for tactical shifts and the expression of opportunistic investments and themes.
APPROACH
Our investment process
We believe our macro framework coupled with our screening methodology and fundamental analysis enable our investment team to identify the closed-end funds and sectors that offer the best potential for attractive income and total returns.
Macro analysis
We begin with a macro framework that identifies top-down drivers of sector and asset class performance, helping to inform return expectations across asset classes and closed-end fund sectors. This helps determine preliminary sector weightings.
Valuation models
The first step in setting the investment universe is screening for funds that meet minimum market capitalization and liquidity requirements. Utilizing proprietary valuation models, we further parse the universe to identify funds we believe may be mispriced.
Fundamental analysis
Next, we evaluate each fund’s success factors, such as the manager’s performance, strategy, balance sheet and shareholder focus. Analyst inputs drive fund assessment, including dividend coverage estimates.
Portfolio construction
The end result is a list of funds that we believe offer superior income, value and total return characteristics. The team then diversifies exposure across equity and fixed income, broad sectors, manager and individual CEFs. Our top-down/bottom-up process drives sector weighting.
View: Performance Vehicles
Vehicles
The strategy is available to investors through the following vehicles:
Institutional Separate Accounts
Cohen & Steers provides customized investment strategies to institutional investors, including some of the world’s largest pension funds, endowments and foundations.
Separately Managed Accounts
For a more personalized approach to investing, Cohen & Steers’ separately managed accounts (SMAs) allow for greater customization of portfolios and enhanced tax efficiency.
Unified Managed Accounts
Mutual Funds
Our investment strategies are available through U.S. registered open-end funds and U.S. registered closed-end funds and are offered through broker-dealers, RIAs, 401(k) plans, deferred compensation platforms and directly from us.
We'd be happy to discuss your investment objectives and determine the right vehicle to implement your strategy.
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Find your Cohen & Steers contactInvesting involves risk, including possible loss of principal. Income from investments is not guaranteed.
We consider the information in this communication to be accurate, but we do not represent that it is complete or should be relied upon as the sole source of suitability for investment. Investors should consult their own investment professional with respect to their individual circumstances.
Past performance does not predict future returns. Risks involved with investment, including potential loss of capital, are substantial and should be carefully considered. The views and opinions are as of the date of publication and are subject to change without notice. There is no guarantee that any historical trend illustrated above 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 above will be realized. Active management is not guaranteed to outperform the broader market index.
Risks of Investing in Closed-End Funds. Shares of many closed-end funds frequently trade at a discount from their asset value. The funds are subject to stock market risk, which is the risk that stock prices overall will decline over short or long periods, adversely affecting the value of an investment in a fund.
Underlying closed-end funds in which the Fund invests have additional fees, may utilize leverage, may not correlate to an intended index and may trade at a discount to their net asset values.
This material represents an assessment of the market environment at a specific point in time and 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. Please consult with your investment, tax or legal professional regarding your individual circumstances prior to investing.
NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE