Cohen & Steers offers efficient solutions for incorporating real assets and other income-oriented strategies in retirement plans, providing the potential for broader diversification to help participants achieve their goals.
Real assets such as real estate, commodities and infrastructure have long been used by managers of corporate and government pension plans for their potential to generate attractive real returns and their potential diversification benefits. These allocations have typically been made through illiquid private vehicles, which tend to be less accessible to Defined Contribution (DC) plan participants.
But as DC programs have evolved, plan sponsors have increasingly looked to provide access to diversifying asset classes that can help participants better achieve their financial goals. These diversifiers are generally characterized by low correlations with stocks and bonds and feature distinctive attributes that may help investors enhance potential risk-adjusted returns.
With the growth of listed real assets in global equity markets, plan participants today are able to gain the benefits of a real assets allocation using listed securities. These vehicles offer liquidity, scalability and daily pricing, making them ideally suited for DC platforms. We are also seeing more DB plans use listed real assets to complement their private investments, helping them to better manage their portfolios, capitalize on emerging opportunities and achieve broader geographic and sector diversification.
For plan participants, listed real assets offer the potential for:
- Diversification benefits that may reduce portfolio volatility
- Improved risk-adjusted returns
- Inflation-hedging attributes
- Attractive sources of alternative income
We believe the need for real assets diversification will take on even greater importance in the years to come. Cohen & Steers is committed to helping plan sponsors provide employees with investment solutions to navigate the ever-changing markets.
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The views and opinions in the preceding commentary are subject to change and represents an assessment of the market environment at a specific point in time, should not be relied upon as legal, investment or tax advice and is not intended to predict or depict performance of any investment. We consider the information 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 advisors with respect to their individual circumstances. 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 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 can be viewed by clicking here or may be obtained by calling 800-330-7348. Please read the prospectus carefully before investing.
Risks of Investing in Real Assets Securities
A real assets 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. The strategy is subject to the risks associated with investments in real estate securities, commodities and natural resource equities, among other investments. The risks of investing in REITs are similar to those associated with direct investments in real estate securities. 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 An investment in commodity-linked derivative instruments may be subject to greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. The use of derivatives presents risks different from, and possibly greater than, the risks associated with investing directly in traditional securities. Among the risks presented are market risk, credit risk, counterparty risk, leverage risk and liquidity risk. The use of derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives. The market value of securities of natural resource companies may be affected by numerous factors, including events occurring in nature, inflationary pressures and international politics. Because the strategy invests significantly in natural resource companies, there is the risk that the strategy will perform poorly during a downturn in the natural resource sector. Please read the Fund’s prospectus for additional information.
Futures Trading Is Volatile, Highly Leveraged and May Be Illiquid. Investments in commodity futures contracts and options on commodity futures contracts have a high degree of price variability and are subject to rapid and substantial price changes. Such investments could incur significant losses. There can be no assurance that the options strategy will be successful. The use of options on commodity futures contracts is to enhance risk-adjusted total returns. The use of options, however, may not provide any, or only partial, protection for market declines. The return performance of the commodity futures contracts may not parallel the performance of the commodities or indexes that serve as the basis for the options it buys or sells; this basis risk may reduce overall returns.
Cohen & Steers open-end funds are distributed by Cohen & Steers Securities, LLC.