Cohen & Steers' Resilient Growth Amid Market Volatility: AUM Drivers and Strategic Positioning in Real Assets

Cohen & Steers (NYSE: CNS), a global leader in real assets and alternative income investing, has demonstrated resilience in its June 2025 performance, with assets under management (AUM) rising to $88.9 billion despite macroeconomic headwinds. This article examines the sustainability of its AUM expansion, investor dynamics, and strategic focus on real assets—key factors positioning the firm to capitalize on inflationary trends. We also address growth concerns raised by Bank of America (BofA) and argue why CNS remains a compelling long-term hold.

The Drivers of June's AUM Growth: Market Appreciation vs. Net Outflows

Cohen & Steers' June AUM increased by $321 million to $88.9 billion, driven primarily by market appreciation of $965 million, which offset net outflows of $184 million and distributions of $460 million. The firm's focus on real assets—such as real estate, infrastructure, and preferred securities—benefited from rising valuations in these sectors amid inflationary pressures.

However, the net outflows highlighted a divergence in investor behavior:
- Institutional accounts (e.g., pension funds, endowments) withdrew $545 million, with advisory accounts alone contributing $526 million to the outflow.
- Retail investors, via open-end funds and closed-end funds, provided net inflows of $260 million and $101 million, respectively.

This suggests a tactical shift by institutional clients toward caution, possibly due to interest rate uncertainty, while retail investors remain attracted to the firm's alternative income strategies.

Q1 2025 Earnings: A Beat Amid Challenges

Cohen & Steers reported Q1 2025 earnings of $0.75 per share, narrowly missing estimates but exceeding revenue expectations of $130.6 million with $133.8 million. The firm also raised its dividend to $0.62 per share (a 5% increase from Q4 2024), maintaining a consistent payout ratio of ~81%. This underscores management's commitment to shareholder returns even amid institutional outflows.

Strategic Positioning: Real Assets and Leadership Shifts

Cohen & Steers continues to prioritize real assets, a sector increasingly favored by investors seeking inflation protection. Key strategic moves include:
1. ETF Expansion: Launched three active ETFs in early 2025 targeting real estate, preferred securities, and natural resource equities, broadening access to retail and institutional investors.
2. Private Assets: Launched the Cohen & Steers Income Opportunities REIT, which outperformed peers with a 13.4% return over 12 months.
3. Leadership Reinforcement: Appointed Seth Laughlin as Head of Real Estate Strategy & Research and Brad Ispass as Head of Enterprise Wealth, signaling a focus on deepening expertise in core asset classes.

These moves align with the firm's long-term strategy to diversify revenue streams and capitalize on secular trends like infrastructure modernization and decarbonization.

Addressing BofA's Growth Concerns

Bank of America recently downgraded CNS to Underperform, citing low organic growth expectations (0–1% over three years) and valuation risks (trading at 2.2x peer multiples). While these concerns are valid, they overlook critical strengths:
- Cyclical Resilience: Real assets like infrastructure and preferred securities often outperform during inflationary periods. Cohen & Steers' global infrastructure strategies, for instance, have attracted $2.1 billion in net inflows over five years.
- Dividend Safety: The 3.2% yield is supported by a robust fee-based revenue model, with ~80% of AUM tied to recurring fees.
- Structural Tailwinds: Rising demand for alternative income in a low-yield environment positions CNS to attract retail investors, as seen in its June open-end fund inflows.

Investment Thesis: Long-Term Hold with Caution

Cohen & Steers is a buy-and-hold candidate for investors seeking exposure to real assets and alternative income. Its June AUM growth, despite institutional outflows, demonstrates the durability of its retail-focused strategies. Key catalysts include:
- ETF Adoption: The firm's new ETFs could drive AUM growth as retail investors seek passive exposure to its expertise.
- Private Asset Upside: The Cohen & Steers Income Opportunities REIT's performance suggests strong potential in non-traded real estate.

However, risks remain:
- Interest Rate Sensitivity: High-quality debt and preferred securities may underperform if rates rise sharply.
- Valuation Compression: BofA's valuation concerns warrant monitoring, particularly if institutional outflows persist.

Conclusion: A Compelling Long-Term Play

Cohen & Steers' specialization in real assets and alternative income positions it to thrive in inflationary environments, even as near-term headwinds like institutional outflows and valuation concerns linger. The firm's dividend consistency, strategic leadership shifts, and ETF-driven diversification reinforce its long-term appeal. Investors seeking a steady income stream and exposure to infrastructure and real estate should consider CNS as a core holding, particularly at current valuations.

Recommendation: Hold CNS for its inflation-protected income profile, but remain cautious of sector-specific risks. A price target of $80–$85 reflects its growth potential, with a strategic entry point below $75.

Data as of July 7, 2025. Past performance does not guarantee future results.