Cohen & Steers Launches Real Assets Compass™ to Help Financial Advisors Build Better Portfolios with Real Estate

Rhea-AI Summary

Cohen & Steers, Inc. (NYSE: CNS) launches Real Assets Compass™ to help improve portfolio risk-return profiles by comparing historical and expected returns and volatility of traditional portfolios with those of a more diversified portfolio of stocks, bonds, and listed and private real estate.

Insights

Market Research Analyst

When examining the introduction of Cohen & Steers' Real Assets Compass™, it is essential to scrutinize the broader implications for asset allocation strategies within the investment community. The tool's emphasis on enhancing portfolio diversification through real estate investments addresses a fundamental aspect of modern portfolio theory—namely, the benefits of asset diversification. By incorporating both historical data and forward-looking capital market assumptions, the Compass aims to offer a robust framework for evaluating the potential role of real estate in mitigating portfolio volatility.

From a market research perspective, the utilization of such tools could signify a shift in investor behavior towards more sophisticated asset allocation models. This shift may drive demand for real estate investment products, including REITs (Real Estate Investment Trusts) and private real estate funds. The impact on the market could be twofold: increased capital inflows into real estate assets and a potential re-rating of real estate as an asset class, as its perceived value in portfolio construction becomes more widely recognized.

Financial Analyst

The launch of the Real Assets Compass™ by Cohen & Steers introduces a strategic element to portfolio management, particularly in how financial advisors and institutional investors approach risk-return profiles. The tool's predictive ability, based on a decade-long capital market forecast, could lead to a reassessment of the risk associated with real estate allocations. For stakeholders, the short-term implications might include a re-allocation of funds towards real estate assets, potentially increasing the liquidity and market capitalization of publicly traded real estate entities.

In the long-term, if Cohen & Steers' assertions hold true, portfolios with a strategic real estate component may exhibit enhanced total returns and improved risk-reward ratios. This could lead to a redefinition of 'optimal' asset allocation, challenging the traditional 60/40 stocks-to-bonds ratio paradigm. However, it is crucial to monitor how these projections align with actual market performance, especially given the cyclical nature of real estate and its sensitivity to interest rate changes.

Economist

The introduction of tools like the Real Assets Compass™ reflects an evolving understanding of asset classes and their interplay with broader economic indicators. Real estate as an asset class has distinct characteristics, such as its typical counter-cyclical inflationary behavior, which can provide a hedge against inflation and economic downturns. The incorporation of real estate into traditional portfolios could, therefore, offer a stabilizing effect during periods of economic volatility.

However, the economic impact of such a tool extends beyond individual portfolios. If a significant number of investors adjust their allocations based on the Compass's recommendations, there could be macroeconomic implications, such as shifts in capital distribution across sectors and changes in asset prices. It is also important to consider the potential risks associated with the long-term illiquidity of real estate investments and the impact of economic cycles on real estate values.

NEW YORK, Jan. 10, 2024 /PRNewswire/ -- Cohen & Steers, Inc. (NYSE: CNS) announced today the launch of the Real Assets Compass™, an interactive tool focused on real estate allocations designed to help financial advisors and institutional investors improve portfolio risk-return profiles. Using the firm's Capital Market Assumptions for the next 10 years and 30 years of historical data, the Real Assets Compass™ ("the Compass") compares historical and expected returns and volatility of traditional portfolios of only stocks and bonds with those of a more diversified portfolio of stocks, bonds and listed and private real estate.

Cohen & Steers believes that many investors are under-allocated to real estate despite the well-documented benefits of the asset class, including its strong performance and potential to enhance risk-adjusted returns. These investors include those across a range of profiles, from self-directed investors to those investing with financial advisors or family offices.

Cohen & Steers' analysis, utilized in the Real Assets Compass™, suggests that adding real estate to an investor's portfolio of stocks and bonds can improve its total return and risk-reward profile. The Compass can help advisors demonstrate the impacts of adding real estate to a portfolio and address client questions about allocating to real estate. The potential benefits of a real estate allocation apply to an array of investor styles, ranging from those more conservative seeking income or lower risk to those seeking growth or higher returns.

Joe Harvey, Chief Executive Officer & President, said:
"The Real Assets Compass™ is the latest example of Cohen & Steers' commitment to innovation and providing advisors with the tools necessary to build better portfolios and educate clients around the benefits of private and listed real estate allocations."

The Cohen & Steers Real Assets Compass™ will enable financial advisors to:

• Build customized investment profiles based on general risk tolerance, investment objective and portfolio size
• View a portfolio allocation with both listed and private real estate based on that profile
• Adjust the total real estate allocation and the mix between listed and private real estate
• Forecast the impact of an allocation to real estate on the risk/return profile of a portfolio through a clear comparison to a traditional stock/bond portfolio
• View resulting 10-year expected portfolio growth in dollars and quantitative performance and risk metrics, as well as the past-30-year return profile
• Download easy-to-understand reports to review with clients

Jon Cheigh, Chief Investment Officer, said:
"We believe real estate should be a strategic, long-term allocation for most investors. Yet too few investors recognize that allocations to real estate can deliver strong absolute and relative returns at lower risk. As a result, we created our Real Estate Advisory Services, which aim to help institutional clients allocate to listed and private real estate based on where we are in the market cycle. These capabilities, along with the Real Assets Compass™, will play an instrumental role in Cohen & Steers' work to close the education gap that exists in investors' understanding of the power of real estate allocations."

The launch of the Real Assets Compass™ follows the appointments of Rich Hill as Head of Real Estate Strategy and Research in September 2022 and Jeff Palma as Head of Multi-Asset Solutions in November 2021, to grow Cohen & Steers' portfolio allocation and research capabilities. The Compass tool can be used by institutional investors in conjunction with the portfolio allocation and real estate strategy insights produced by the firm.

Financial advisors and other investment professionals can find more information on the methodology and access the Real Assets Compass™ at cohenandsteers.com/real-assets-compass.

About Cohen & Steers. Cohen & Steers is a leading global investment manager specializing in real assets and alternative income, including real estate, preferred securities, infrastructure, resource equities, commodities, as well as multi-strategy solutions. Founded in 1986, the firm is headquartered in New York City, with offices in London, Dublin, Hong Kong, Tokyo and Singapore.

Methodology
The methodology of the Real Assets Compass™ is driven by asset allocation principles designed to meet risk-return objectives while considering investor preference for capital appreciation vs income generation. Inputs to these expectations include return, volatility and correlation across asset classes to generate outcomes that allow for diversification across multiple asset classes. Expectations for fundamental variables such as growth, inflation and interest rates are also factored in as further inputs.

The intent of the Real Assets Compass™ is not to predict or project future returns of any investment, asset class or portfolio. Instead, the purpose of the tool is to help understand how the addition of real estate investments to a portfolio of other investments might impact the returns of that portfolio, based on a number of assumptions and expectations, which may be incorrect, potentially materially so, and are subject to change without notice. The Real Assets Compass™ is provided as an educational tool for institutional investors, and is not intended to be and should not be relied upon as a recommendation to invest in any specific security or asset class or to adopt any investment strategy or as the primary basis for any investment decisions. 

Forward-Looking Statements
This press release and other statements that Cohen & Steers may make may contain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the Company's current views with respect to, among other things, the Company's operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "may," "will," "should," "seeks," "predicts," "intends," "plans," "estimates," "anticipates" or the negative versions of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these forward-looking statements. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Website: https://www.cohenandsteers.com
Symbols: NYSE: CNS

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SOURCE Cohen & Steers, Inc.

FAQ

What did Cohen & Steers, Inc. (NYSE: CNS) announce?

Cohen & Steers, Inc. (NYSE: CNS) announced the launch of the Real Assets Compass™, an interactive tool focused on real estate allocations designed to help financial advisors and institutional investors improve portfolio risk-return profiles.

How does the Real Assets Compass™ work?

The Real Assets Compass™ compares historical and expected returns and volatility of traditional portfolios of only stocks and bonds with those of a more diversified portfolio of stocks, bonds, and listed and private real estate.

What are the benefits of adding real estate to an investor's portfolio?

Cohen & Steers' analysis suggests that adding real estate to an investor's portfolio of stocks and bonds can improve its total return and risk-reward profile.

Who can benefit from using the Real Assets Compass™?

The Compass can help advisors demonstrate the impacts of adding real estate to a portfolio and address client questions for a range of investors, from self-directed investors to those investing with financial advisors or family offices.