Cohen & Steers (NYSE:CNS) reported third-quarter adjusted earnings per share of $0.89, up from $0.85 in the prior quarter, as higher average assets under management and controlled expenses helped lift profitability. The investment manager recorded its fifth consecutive quarter of organic growth and its strongest net inflow period since the fourth quarter of 2021.
Chief Financial Officer Amit Muni said the company generated $1.6 billion in net inflows during the quarter, representing more than 6% annualized organic growth. Assets under management ended the quarter at $95.9 billion, down from $100 billion at the end of the second quarter, as negative market movement offset inflows. Average AUM, however, rose to $101 billion during the period.
Net income totaled $46.5 million, increasing 6% sequentially and 11% from the third quarter of last year. Revenue rose 3% from the prior quarter to $156 million, while operating expenses increased 2% to $98 million. The company’s operating margin expanded to 37.2%.
Muni said Cohen & Steers continues to expect compensation and benefits expenses to represent about 40% of revenue, general and administrative expenses to grow at a mid-single-digit rate versus 2025, and a pro forma effective tax rate of 25% to 26%.
Flows Broaden Across Strategies and Channels
Management said inflows were broad-based across investment strategies, vehicles and distribution channels. Every investment strategy posted positive net inflows, led by real estate, multi-strategy real assets and preferred securities.
The wealth channel generated $1.3 billion in net inflows. Chief Executive Officer Joe Harvey said growth was balanced among mutual funds, active exchange-traded funds and SICAVs, or offshore mutual funds. The company’s active ETF assets grew 22% during the quarter to $1.3 billion.
Cohen & Steers launched its seventh active ETF in August, the Cohen & Steers Real Assets Active ETF, trading under the symbol CSRA. Harvey said the fund is designed as a multi-strategy real assets allocation that can offer inflation sensitivity, diversification and long-term total-return potential.
Preferred securities posted a third straight quarter of net inflows, with low-duration preferred securities standing out. Harvey said advisors are seeking income while limiting interest-rate exposure, and management views yields near 6% as an attractive risk-adjusted income opportunity.
Institutional net inflows were modestly positive at $49 million. New advisory and sub-advisory mandates more than offset a one-time portfolio reallocation by a Japanese sub-advisory client in real estate. The company’s won and unfunded institutional pipeline increased to $1.9 billion from $1.6 billion in the prior quarter, its second-largest level ever, according to Harvey.
- About 20% of the pipeline was in each of real estate, listed infrastructure and multi-strategy real assets.
- North America represented 56% of the pipeline, followed by EMEA at 22% and APAC at 16%.
- The company said $700 million of funding activity was replenished by more than $1.1 billion of new mandates awarded during the quarter.
Harvey also said Cohen & Steers has been notified of approximately $400 million in partial account-rebalancing outflows from two institutional clients. He said neither reallocation was related to investment performance; one client is eliminating an asset class, while the other is being acquired and changing portfolio strategy for a portion of its accounts.
Investment Performance Rebounds
President and Chief Investment Officer Jon Cheigh said 74% of the company’s AUM outperformed during the third quarter, up from 40% in the second quarter. Over the past one, three and five years, 57%, 97% and 98%, respectively, of AUM outperformed.
Cheigh highlighted an improvement in real estate investment performance. Eighty-six percent of U.S. real estate AUM outperformed in the third quarter, compared with 15% in the prior quarter, while global real estate improved to 67% outperforming from 2%. Infrastructure and preferred securities continued to show strong results, with 100% and 97% of AUM, respectively, outperforming over the past year.
He said higher long-term Treasury yields have pressured REITs, listed infrastructure and preferred securities since the summer. Treasury yields above 5% have been driven primarily by rising real yields rather than a major change in inflation expectations, Cheigh said. In his view, about half of the recent increase reflects resilient economic growth, while the rest reflects higher term premiums tied to fiscal issues, debt supply and global factors.
Cheigh said management does not believe higher rates have changed the relative attractiveness of the company’s asset classes. He pointed to improving real estate fundamentals, including reduced new supply and growing demand, and cited expected EBITDA growth of 9% for global listed infrastructure and anticipated earnings growth of 20% for natural resource equities.
Infrastructure, Real Assets and International Expansion
Harvey said listed infrastructure has recorded seven consecutive quarters of net inflows as allocators increasingly treat it as a dedicated strategic allocation. He said investor interest is not necessarily coming at the expense of private infrastructure; instead, institutions are recognizing potential benefits from combining listed and private exposure, including liquidity, sector access and differing return cycles.
Multi-strategy real assets strategies have attracted nearly $900 million of year-to-date inflows. Harvey said investors are increasingly considering real assets as a strategic allocation amid persistent inflation concerns, equity-market concentration and a need for diversification. The company’s open-end multi-strategy real assets mutual fund reached $2.1 billion in AUM, compared with $150 million in 2020.
The company also plans to further invest in its SICAV business after reporting its second-best quarterly flow result, following a record second quarter. Harvey cited activity in the United Kingdom, South Africa and Asia, where developing wealth and advisory markets are creating opportunities to educate investors on real assets.
In private real estate, Harvey said Cohen & Steers Income Opportunities REIT, or CNSREIT, has approximately $900 million in total assets and about $400 million in equity value. He said the nontraded REIT is approaching its three-year track record in January, which could make it more viable for placement with larger distributors. The company has focused fundraising efforts on endowment-style registered investment advisers, while broader wirehouse demand for real estate remains behind infrastructure and private credit.
About Cohen & Steers (NYSE:CNS)
Cohen & Steers, Inc is a global investment management company specializing in listed real assets and alternative income. The firm manages portfolios focused on areas such as real estate securities, infrastructure, natural resource equities, commodities, preferred securities and other income-oriented investments.
Its investment solutions are offered through mutual funds, exchange-traded funds, closed-end funds, institutional accounts and separately managed accounts. Cohen & Steers serves a range of clients, including institutional investors, financial advisers and individual investors, with strategies covering markets in the United States and internationally.
Founded in 1986 by Martin Cohen and Robert Steers, the company is headquartered in New York City and maintains an international presence to support its global investment activities.
