Investment manager Cohen & Steers has expanded its undertaking for collective investment in transferrable securities (Ucits) range with a fund aiming to provide high current income and capital preservation in the preferred securities market.
The Sicav Short Duration Preferred Income Fund focuses on reducing interest rate sensitivity and managing volatility. It aims to provide high current income with capital preservation by investing in investment-grade preferred and debt securities.
Offering a target duration of under three years, it has been launched in the UK but also across the major markets in Europe and Asia, including Germany, Austria, Switzerland, Spain, Italy, Singapore and Hong Kong.
Preferred securities offer high yields, stable income, and portfolio diversification with a low correlation to traditional fixed income, according to Cohen & Steers. They function like bonds, paying fixed or floating income, but rank between common stock and senior debt. Preferreds are mainly issued by banks, insurers, and utilities. They come from stable, regulated companies often underrepresented in fixed-income markets.
Cohen & Steers offers preferred securities as bond alternative
The funds are sub-funds of Cohen & Steers Sicav, a Luxembourg-domiciled Ucits. The launch marked Cohen & Steers’ second Ucits fund focused on preferred securities. The first, the Sicav Preferred Income Fund, was launched in 2017.
Elaine Zaharis-Nikas, head of fixed income and preferred securities at Cohen & Steers and one of the managers of the fund, commented: “We see significant opportunities in the $1.2 trillion preferred securities market, driven by attractive fundamentals, including increased issuance from institutional preferreds and contingent capital securities. Recent rating agency methodology changes have also encouraged non-financial companies to issue preferreds, enhancing diversification in the sector. Overall, we are optimistic about preferreds’ return potential and the appeal of short-duration strategies.”
David Conway, head of international wholesale distribution, added: “In an environment where income and quality matter more than ever, we’re excited to launch the Cohen & Steers Sicav Short Duration Preferred Income Fund to provide investors with access to a diversified portfolio of institutional preferred securities. We believe this fund is a compelling solution for investors seeking long-term total return through high and resilient income.”
