Cohen & Steers, a U.S. group with about $60 billion in assets, is the latest fund manager to affirm its commitment to London despite Brexit, pledging to expand its staff in Britain’s financial center.
Its plans aren’t derailed by British Prime Minister Theresa May’s announcement this week to the European Union that she would invoke the “Article 50” clause for the U.K. to leave the trading bloc. Cohen & Steers is adding to its analyst and client servicing teams over the coming weeks, while planning to launch later this year a global Preferred Securities fund that will be available to investors in Europe, according to interviews the firm gave Institutional Investor.
The publicly traded asset manager’s commitment to London follows similar pledges from other buy-side firms, including Columbia Threadneedle Investments, OppenheimerFunds and Unigestion, despite some sell-side banks outlining plans to seek alternative locations for their teams.
“We believe that Brexit may impact some of the fundamentals, but in terms of business development and distribution, at this point, we don’t see a need to change our strategy,” Stephen Dunn, Cohen & Steers’ executive vice president and head of global distribution, said in an interview.
For Cohen & Steers, the U.K. remains appealing compared to much of Europe. Dunn said the firm’s strategies in listed property, listed infrastructure, commodities and natural resource equities, are being actively sought after by many U.K. pension funds and consultants who are seeking income and are keen to diversify.
“There are certain countries where, we believe, there isn’t an appetite for our strategies,” he said, pointing to challenges the fund manager faces in Germany, Switzerland and The Netherlands.
“Historically, Germany has not been a place where investors have opted for listed real assets. It has been very private equity orientated,” Dunn said. “Others, like Switzerland, have had a country bias, and, in the Dutch market, regulators have been pushing fees down.”
Cohen & Steers, which is based in New York, developed a European footprint in Brussels when it acquired Belgium boutique Houlihan Rovers in 2006. But the group relocated to London and commissioned Greenwich Associates to assess its product range and the markets in which it operates.
“We wanted to be in London. Brussels was not the easiest place to do business,” Dunn said. “We wanted to be where the major capital markets activity was.”
The firm has portfolio management, research, operations, and trading in London, according to Dunn. His colleague Ben Morton – a portfolio manager for listed infrastructure – said the investment management team is keeping a close watch on the political situation in Europe, noting the forthcoming elections in France and Germany.
“Increasingly, we are having to be as concerned about politics as we have about regulation,” said Morton. “If you think about Europe post the financial crisis, it was the place where we saw the most punitive regulatory actions. You have to anticipate that politics is now just as important as regulation.”
Despite the group pledging its commitment to London, Dunn acknowledged the appeal of Luxembourg domiciled funds to some of its Asian clients in Japan. The firm’s planned Preferred Securities fund, which will have a global mandate, will be domiciled in Luxembourg and managed by William Scapell in Cohen & Steers’ New York office.
