Cohen & Steers launches fund to tackle fixed income challenge

Cohen & Steers is launching a preferred securities fund for the European market as investors contend with historic low yields in bonds.

The Cohen & Steers SICAV Global Preferred Securities fund, to be managed by William Scapell, will launch on 15 May.

Preferred securities – generally issued by large companies with relatively stable cash flows, such as banks, insurance companies and utilities represent a $900bn market.

Cohen & Steers already runs the largest actively managed preferred securities fund in the world through its US-based Cohen & Steers Preferred Securities and Income fund.

It says the new fund will benefit from improving fundamentals for banks and insurance companies.

Robert Steers, the firm’s chief executive officer, says: “With the outlook for fixed income uncertain, demand for alternative income strategies is rising and the fund offers investors a distinctive solution to meet their portfolio needs.”

Scapell says: “After a 35-year bull market in bonds, investors must now contend with two challenges: how to earn income with yields still hovering near historic lows, and how to protect against a rising interest-rate environment.”

“Based on expectations of rising rates globally, our focus is primarily on attractive income opportunities in securities with lower durations, which have been historically less sensitive to changes in interest rates. As we have often seen, high income and wider credit spreads can have a smoothing effect on total returns during periods of volatility,” Scapell adds.