Cohen & Steers is an industry leading specialist in real estate securities, and this global fund is one of its flagship products. It invests in the entire global real estate investment trust (REIT) and publicly traded real estate company universe, with analysts looking at stocks from both an equity and property perspective. This makes it very comprehensive and fairly unique. The manager is supported by a large and experienced team. The process looks at potential investments from multiple angles and timeframes to get the fullest picture possible and create a diversified, all-weather portfolio.
Our opinion
Cohen & Steers Global Real Estate Securities is a ‘one-stop shop’ for access to this disparate asset class. The fund benefits from the knowledge of some of the best analysts in this field and the fact that the team is so large that analysts can conduct more in-depth analysis on a smaller number of stocks than their peers. It is a very useful fund for those looking for a safe pair of hands in an asset class that can add good diversification to a wider portfolio.
Company description
Cohen & Steers was founded in 1986 as specialists in Real Estate and was the first dedicated manager in the sector. It is now a publicly listed industry leader, with over 350 staff across five cities in three continents. The firm has $97bn of assets under management, predominantly in the listed real assets space, as well as some assets in alternative income and multi-strategy. Almost all are in asset backed securities. The firm’s specialism and experience has given it enormous scale and a huge depth to its research team.
Fund manager
Cohen & Steers Global Real Estate Securities is nominally managed by Jon Cheigh, who is also chief investment officer (CIO) of the firm. However, Cohen & Steers has a very flat structure meaning Jon takes considerable input from the extensive global real estate investment team. There are regional heads for Europe, Americas and Asia Pacific, as well as specialist sector portfolio managers who feed into Jon. These teams have three weekly meetings to discuss ideas and make decisions.
Jon himself has over 25 years of industry experience and joined Cohen & Steers in 2005. He was originally an analyst before numerous promotions within the firm took him to his current CIO role in 2019. Prior to this, he has experience from roles in real estate at two subsidiaries of Security Capital Group. He has a BA from Williams College and an MBA from the University of Chicago.
Jon CheighFund manager
Investment process
The process uses a combination of fundamental company analysis, and a view of the wider economic environment to balance investment views. This helps the team cut through the market noise and understand the nuances behind each stock and what is driving performance.
The investment universe starts with around 400 different Real Estate Investment Trusts (REITs). The universe also includes gaming and casino companies, and some property services companies. The fund is also expanding into sectors such as data centres and towers, as technology continues to drive demand.
The team analyses each stock from two angles; the short-term, when REITs can behave more like equities; and the long-term when they exhibit property-like characteristics.
When looking at valuations, the team will consider the buildings themselves and their net asset values (NAV), whereas equity analysis is more about using a dividend discount model (DDM) which is a way of valuing future income streams compared to today’s value.
Each analyst has the capacity to conduct extremely in-depth research on their holdings, because they only cover 20-25 stocks on average (compared to 40-60 for industry standards). This allows them to look beyond just the performance of underlying company, to the drivers behind it, for example by reading investment notes for Microsoft and Nvidia to get a better idea about the prospects for a data centre company. This gives the analysts a better understanding behind their ideas, and enables them to build higher conviction, with the aim of generating better performance.
The combination of this fundamental analysis, long and short-term modelling, and factor analysis leads to a ranking of the universe by their estimate of discount to the current share price. It allows them to get the best idea of what looks cheapest globally today. Their positioning is driven by what they find most attractive at the biggest discount.
ESG
ESG - Integrated
Cohen & Steers views ESG as critical to unlocking value and mitigating risk and has a four-stage for integration. First it identifies key ESG factors and determines weights for each area using MSCI and other key sources as a guide. It then scores each area using third-party data and its own proprietary assessments. These scores will then be integrated into investment decisions. Finally, Cohen & Steers will look to engage with a company and promote best practice, to help long-term company performance.
Environmental real estate factors include building energy efficiency; energy, waste, and water management; green leases; green bond issuance; and GHG resuction policy. Social factors include human capital management; diversity and inclusion; health and wellness; and community impact. Governance factors include management acumen; board structure, tenure, refreshment and alignment; shareholder rights, audit and risk oversight; and insider/management ownership and shareholder structure.
Risk
The fund manages risk relative to the benchmark to ensure that stock selection is the primary driver of returns. On a country level, this allows ranges of ±15% on North America or emerging markets and ±10% on both Europe and Asia. There is also a risk team in support, that assesses where the fund is exposed. On an individual stock basis, the analysts use scenario analysis and stress testing to assess absolute risks as well as helping to see if they are pointed towards any specific factors risks.
The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund nor of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating. All performance data, as well as fund size, OCF, AMC, annual income (historic), share price discount or premium, is sourced directly from FE Analytics, and will change periodically.