COHEN & STEERS Q1 FY26 earnings call CNS

Management emphasized a structural transition in the global economy driven by deglobalization, AI, inflation uncertainty, and the end of low interest rates. The Middle East conflict, while causing short-term slowdowns, reinforces the long-term thesis for real assets as a diversifier against geopolitical fracturing and persistent inflation. The firm forecasts consumer inflation to average 3% annually in the U.S. over the next 10 years, well above the Fed's 2% target.

The call highlighted the continued strength and relevance of real assets, with listed infrastructure up 8% and diversified real assets up 12% for the quarter. Management advises clients to include hard assets as a meaningful allocation, sourced from equity and fixed income, to diversify against different economic drivers and inflation regimes. The fundamental inflection for REITs is expected to drive earnings growth of 5-6% this year and 7-8% next year.

Cohen & Steers maintained a strong performance scorecard, with 86% of AUM outperforming its benchmark over one year, and over 97% outperforming over three and five years. 95% of open-end fund AUM received 4- or 5-star Morningstar ratings, demonstrating consistent long-term outperformance and meeting the primary objective of providing outstanding returns for investors.

The firm is actively expanding its product offerings, with active ETFs showing strong momentum, contributing $224 million in third-party net flows and reaching $675 million in total AUM. Plans include converting the Future of Energy fund to an ETF midyear and launching a multi-strategy real assets ETF later this year. The non-traded REIT continues to perform strongly, with 10.6% annualized returns since inception against a 4.3% peer average, driven by a focus on open-air shopping centers with 97% occupancy.

The institutional advisory channel saw its second consecutive quarter of net inflows, with a strong unfunded pipeline of $1.7 billion, including $74 million in new mandates awarded and $490 million funded in the quarter. While sub-advisory experienced $269 million in outflows, particularly $164 million from Japan, the firm noted improved market share in that region. Management is coaching clients on optimizing portfolios with both listed and private real estate, acknowledging current challenges with liquidity in private vehicles.

Cohen & Steers has made significant investments in its distribution capabilities for 2026 and 2027, including key hires for a new Head of Japan, a newly created Chief Operating Officer for distribution, and additional RIA sales roles. The firm also promoted a leader for wealth and brought in a wealth sales leader. The strategy is to tie future sales team additions to organic growth success.