Cohen & Steers Lays Plans To Issue ETFs

November 01, 2013

Asset manager that partially backs iShares’ ‘ICF’ made regulatory moves to bring its own ETFs into the sphere.

Cohen & Steers Capital Management, an investment firm known for its expertise in real estate, filed two sets of regulatory paperwork requesting permission from the Securities and Exchange Commission to market index-based as well as actively managed ETFs. Its first fund will be an index strategy focused on real estate investment trusts domiciled around the world.

The index fund will be based on the Cohen & Steers Global Realty Majors Index, pointing to an important piece of its petition to offer index ETFs; namely, that it’s also seeking to build its passive ETFs around its own in-house indexes. That would put Cohen & Steers at the center of a growing self-indexing trend among fund sponsors that’s aimed at cutting costs and the time it takes to launch a fund.

The New York City-based money manager’s plans to offer a REIT ETF appears to be an attempt to build on the popularity of an existing ETF marketed by BlackRock that carries the Cohen & Steers name. The iShares Cohen & Steers REIT ETF (ICF | A-85), launched in 2001, has assets under management of $2.6 billion and is currently ranked as one of the best in the sector.

The petition to offer actively managed funds didn’t include an initial fund, but laid out plans to possibly bring a host of funds to market, including strategies targeting U.S. and non-U.S. equities and fixed income. It also said some of its funds may target currencies and use short-selling strategies.

The index fund petition cast a similarly wide net, detailing plans to market fund strategies targeting domestic and foreign equities as well as fixed income. The “exemptive relief” filing also mentioned that Cohen & Steers may bring to market so-called 130/30 strategies.

The two Cohen & Steers filings are the latest example of an established player in the world of mutual funds laying the groundwork to enter the world of ETFs. Many firms have done so in the past few years, though few have actually taken the next step and launched funds. This reluctance to take the plunge points to risks that cheaper ETFs may pilfer assets these firms have in existing mutual funds.

Exemptive relief petitions seek exceptions from certain aspects of the Investment Company Act of 1940, with the exceptions setting the stage for fund companies to offer ETFs. It often takes more than a year for a fund firm to get from the exemptive relief filing to the launch of an actual fund.

 

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