Cohen & Steers targets DC pensions with listed real assets fund

Cohen & Steers has launched a fund to provide defined contribution (DC) pension schemes access to global real assets.

The fund manager said the newly launched SICAV Diversified Real Assets Fund will invest in listed securities linked to global real estate, natural resources, infrastructure and commodities.

“As a UCITS strategy, it provides easy access for investors that typically struggle to implement allocations to real assets, such as UK DC pension schemes,” it said.

The manager explained that a diversified blend of real assets has been shown to offer multiple potential benefits to investors, from inflation protection to portfolio diversification, underpinned by the distinct return drivers of real assets relative to stocks and bonds.

Additionally, a diversified blend of real assets has historically delivered equity-like returns over full market cycles, leading to improved risk-adjusted return potential, not simply lower absolute volatility, it said.

“With the outlook for bonds turning negative, uncertainty on the horizon for equities, and global inflation signals pointing upwards, Cohen & Steers believes it is especially important for investors to address both under-diversification and the risk of inflation surprises,” it said, adding that incorporating a diversified real assets allocation may help mitigate these risks.

Marc Haynes, the head of sales and client service, EMEA, at Cohen & Steers UK, said the fund has been designed in close consultation with the UK workplace DC market.

“In contrast to defined benefit pension [DB] schemes – which have long embraced real assets – cost and structural reasons have been a major impediment to DC schemes investing in real assets, so we are particularly excited to address these issues and attempt to level the playing field.

“We believe that this launch represents a significant step forward in helping to raise the sophistication of DC investing in the UK and ultimately improve member retirement outcomes.”

Haynes added that by combining multiple real asset classes together into a single strategy, the fund could help smooth the risks of standalone categories.

“We believe the fund is particularly suitable as a performance driver and diversifier within a DC default fund solution, but also within smaller DB schemes.”

The fund is a sub-fund of Cohen & Steers SICAV, a Luxembourg-domiciled UCITS.