In response to the slump in bond yields and the threat of rising interest rates, Cohen & Steers is set to launch a UK version of its $6.5 billion-plus (£5 billion) global preferred securities fund.
The Cohen & Steers Global Preferred Securities fund will be listed on the firm’s Luxembourg Ucits platform on May 15.
The fund will be managed by William Scapell and his team who have been running similar strategies—including the US version of the preferred securities fund—for Cohen & Steers since 2003.
Scapell (pictured), told Wealth Manager, the fund will invest in a global portfolio consisting principally of preferred securities and other capital securities—or hybrid securities—which trade on exchanges as well as over-the-counter (OTC).
He added it will mainly invest in developed markets.
The target yield of the fund will be between 5-7% and an annual management charge of 1% will be levied on A/AX share classes.
‘After a 35-year bull market in bonds, investors must now contend with two challenges: how to earn income with yields still hovering near historic lows, and how to protect against a rising interest-rate environment,’ said Scapell.
‘Based on expectations of rising rates globally, our focus is primarily on attractive income opportunities in securities with lower durations, which have been historically less sensitive to changes in interest rates.’
The firm’s chief executive officer, Robert Steers, said: ‘The launch of the fund is the latest step in Cohen & Steers’ commitment to bringing our core competencies in alternative income and real assets to European and other investors worldwide.
‘With the outlook for fixed income uncertain, demand for alternative income strategies is rising and the Fund offers investors a distinctive solution to meet their portfolio needs’