Investment manager Cohen & Steers, in collaboration with IDR Investment Management, has launched a real estate strategy that combines listed real estate securities and core private real estate into a single, actively managed portfolio.
The strategy will use IDR’s patented process to replicate the NCREIF Fund Index – Open End Diversified Core Equity, while giving managers the ability to overweight or underweight listed and private components based on market conditions. This hybrid approach offers a more flexible and forward-looking alternative to traditional core private real estate allocations, according to the providers.
The strategy aims to deliver better risk-adjusted returns, enhanced liquidity, and broader sector diversification by tactically shifting between listed and private real estate to exploit valuation gaps. The firms said the strategy targets higher returns with similar or lower volatility than core private real estate, while offering greater liquidity than direct investments.
It also opens access to modern REIT categories like data centres, cell towers and healthcare facilities, alongside traditional sectors such as industrial and residential. This allows for enhanced diversification and positioning for long-term structural trends, shared the providers.
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This dynamic allocation will be managed by real estate and asset allocation specialists from Cohen & Steers and IDR.
Jon Cheigh, president and chief investment officer of Cohen & Steers, said: “There is a lead-lag dynamic in real estate investing in which listed performance leads private in both downturns and recoveries, creating pricing differential opportunities for investors. By blending listed and private real estate in a single strategy, we can help investors capitalise on valuation mismatches between listed and private, delivering the potential for higher total returns and better liquidity.”
Garrett Zdolshek, chief investment officer of IDR, said: “We are passionate about the benefits that indexing core private real estate provides investors as a tool to help them achieve their investment objectives. We believe this strategy presents investors with an innovative and holistic solution for managing their listed and private core real estate allocations. Cohen & Steers’ long-term track record of generating alpha and the firm’s steadfast commitment to excellence makes them the ideal partner for this strategy.”
