Cohen & Steers Earnings Call Shows Steady Growth

Cohen & Steers, Inc. ((CNS)) has held its Q4 earnings call. Read on for the main highlights of the call.

Cohen & Steers Earnings Call Signals Solid Momentum Amid Strategy Headwinds

Cohen & Steers’ latest earnings call struck a broadly positive tone, with management emphasizing steady growth in revenue and operating income, recurring net inflows, and a powerful institutional pipeline. Strong long-term investment performance and successful new product launches—especially in active ETFs and infrastructure strategies—underpinned a constructive outlook. At the same time, executives were candid about challenges, including underperformance in the firm’s largest U.S. REIT strategy, a slight sequential decline in assets under management (AUM), rising G&A and talent-related expenses, and competitive pressure in certain income-oriented products.

Earnings and EPS: Gradual but Consistent Growth

Cohen & Steers delivered full-year 2025 as‑adjusted earnings per share of $3.09, up about 5.5% from $2.93 in the prior year, signaling steady profit expansion despite a mixed market backdrop. Fourth-quarter reported EPS came in at $0.81, unchanged from the previous quarter, reflecting a balance between revenue growth and rising costs. While not explosive, the EPS trend shows the firm is converting higher revenues into earnings, even as it continues to invest in people and distribution.

Revenue Acceleration Supported by Performance Fees

Fourth-quarter revenue reached $143.8 million, up 2% sequentially, with the full year totaling $554 million, a 6.9% increase versus the prior year. The quarter included $1.7 million of performance fees, adding a modest upside to management fees driven by higher AUM and strong investment performance. The revenue growth profile suggests that Cohen & Steers is benefiting from both positive markets and net inflows, while performance fees provide an additional, though variable, earnings lever.

Operating Income and Margin: Modest Expansion

Operating income climbed to $52.4 million in the fourth quarter, up 3% sequentially, with full-year operating income of $195.1 million, a 6.3% year-over-year increase. The operating margin ticked up to 36.4% from 36.1% in the prior quarter, reflecting an incremental expansion in profitability. Despite higher G&A and talent costs, management is maintaining healthy margins, suggesting disciplined cost control even as the firm invests for growth.

Net Inflows: A Durable Positive Trend

The firm posted fourth-quarter net inflows in the $1.2–$1.28 billion range, contributing to full-year net inflows of $1.5 billion. Notably, Cohen & Steers has achieved net inflows in five of the last six quarters, illustrating resilience across cycles. Management highlighted that in periods after Federal Reserve easing, quarterly net inflows have averaged roughly $612 million, indicating that a more supportive rate environment tends to amplify demand for the firm’s strategies.

AUM and Institutional Pipeline Near Multi‑Year Highs

Year-end AUM stood at $90.5 billion, with a full-year average AUM of $88.6 billion. While AUM declined slightly from the prior quarter due to market depreciation and distributions, the forward picture remains encouraging. The “one‑but‑unfunded” institutional pipeline reached about $1.72 billion across 20 mandates, near multi-year highs and well above the three-year average of $970 million. In the fourth quarter alone, the firm won $660 million in new mandates, with $385 million funded intra-quarter, underscoring strong institutional demand.

Investment Performance: Broad-Based Outperformance

Cohen & Steers showcased standout investment performance, with 95% of AUM outperforming benchmarks on a one-year basis and similarly strong figures over three-, five-, and ten-year periods. This track record is further validated by external ratings, with 90% of open-end fund AUM carrying 4- or 5-star Morningstar ratings. Such broad-based outperformance is a critical driver of sales momentum, institutional mandate wins, and the firm’s ability to defend fees in a competitive asset management landscape.

Real Assets and Natural Resource Strategies Lead Returns

The call highlighted particularly strong returns in several real asset and natural resource strategies. Natural resource equities gained roughly 30% in 2025, with more than 6% in the fourth quarter alone, while real assets multi-strategy returned about 17%. Global listed infrastructure delivered between 14% and 22% depending on the sub-strategy, and gold strategies surged about 64% in 2025. In private real estate, preliminary NCREIF data pointed to a total return of 0.9%, marking a sixth consecutive quarter of improving returns. These performance trends support the firm’s positioning as a specialist in real assets and income-oriented strategies.

Product Innovation: Active ETFs and CCAP Gain Traction

Management highlighted strong progress on product innovation and distribution. The firm launched five active ETFs, which have already accumulated $378 million in AUM, including $90 million of seed capital. Adoption of the REIT ETF is accelerating, with the first $50 million in assets reached in 159 days and growth speeding up thereafter. Global listed infrastructure strategies attracted record net inflows of $1.6 billion, and the CCAP vehicles saw record inflows of $291 million. International expansion remains a growth driver, with AUM in Australia doubling over two years to $1.2 billion. These developments show Cohen & Steers successfully tapping new client segments and vehicles beyond traditional mutual funds.

Balance Sheet Strength and Cost Discipline

The firm’s capital position remains robust, with year-end liquidity of $403 million, up $39 million from the prior quarter. The compensation ratio fell to 39% in the fourth quarter and was 40% for the full year, beating prior guidance of 40.5%. Management reiterated its commitment to a 40% compensation ratio going forward and signaled that general and administrative expense growth will be managed carefully. While total expenses rose in the quarter, driven mainly by travel, business development, and talent acquisition, the company continues to preserve high margins and financial flexibility.

U.S. REIT Strategy: Major Headwind in Core Franchise

Despite overall strength, Cohen & Steers’ largest strategy—U.S. REITs—remains a notable weak spot. The strategy returned just 3.2% in 2025 and ranked last among the 11 S&P 500 sectors, reflecting sector-wide headwinds and dispersion across property types. U.S. REITs were modestly down in the fourth quarter, with ongoing weakness in areas such as data centers and telecom landlords. Given the strategy’s size within the firm’s AUM mix, this underperformance represents both a drag on overall results and a key area of focus for management.

AUM Decline Despite Inflows Highlights Market Sensitivity

Although the company delivered over $1.2 billion in net inflows during the fourth quarter, ending AUM of $90.5 billion was slightly lower than in the prior quarter. This reflects the impact of market depreciation and client distributions, which offset the positive flow picture. The dynamic underscores the sensitivity of the firm’s asset base to market movements, particularly in real assets and listed real estate, and highlights the importance of sustaining performance and flows to counteract market volatility.

Expense Pressure from G&A and Talent Investment

Total expenses rose quarter-over-quarter, with higher G&A a key driver, including increased spending on travel, business development, and talent acquisition. Management noted that compensation growth was kept below revenue growth, helping support margins, but the higher G&A spend reduced absolute operating leverage. The company is balancing the need to invest in distribution and capabilities with the imperative to maintain profitability, a tension that will remain in focus for investors tracking margin trends.

Mixed Flows in Open-End Funds and Preferred Strategies

Open-end funds showed only a small net inflow of $13 million in the fourth quarter, masking underlying pressure in certain strategies. A third real estate fund and the core preferred stock fund experienced outflows, even as preferreds delivered strong returns in 2025. Management suggested that some investors may be reallocating capital toward private credit, which has been highly competitive in the current environment. This pattern points to ongoing product-level shifts within the broader positive flow picture.

Client Terminations and Rebalancing Normalize but Still Bite

Previously disclosed client terminations, totaling roughly $500–$600 million, have weighed on flows in recent periods. While management indicated that termination activity has normalized, subadvisory channels still saw a $330 million account termination and $172 million in rebalancing outflows during the quarter. These actions highlight the ongoing churn and tactical asset-allocation changes among institutional clients, even as the firm continues to win new mandates and rebuild its pipeline.

Tight Credit Spreads Pressure Fixed Income and Preferreds

Most fixed income segments generated only slightly positive returns in the fourth quarter as credit spreads remained historically tight. This environment limits return potential for traditional fixed income and affects the relative appeal of preferred strategies versus private credit. For Cohen & Steers, this creates a tougher backdrop for certain income-oriented products, especially preferred securities, which are competing with high-yielding private credit offerings that many investors currently favor.

Forward-Looking Guidance: Discipline and Profitability Focus

Looking ahead to 2026, management outlined a disciplined outlook. They expect to maintain a compensation ratio of around 40% and guide to mid-single-digit annual growth in G&A expenses, signaling continued investment but with tighter cost control than in the recent past. The as‑adjusted effective tax rate is projected at 25.4%. Liquidity stood at $403 million at year-end, though management noted it typically declines in the first quarter due to bonus payments. The company also expects its CCAP platform to achieve profitability in 2026, adding another potential earnings contributor. These targets, combined with a strong pipeline and healthy margins, frame a constructive, if measured, growth trajectory.

In sum, Cohen & Steers’ earnings call painted a picture of a specialized asset manager benefiting from strong performance, innovative product launches, and a deep institutional pipeline, while still contending with sector-specific headwinds and rising costs. The firm’s disciplined approach to compensation, steadfast profitability, and focus on real assets and income strategies position it well if markets remain supportive. Investors will be watching closely to see whether U.S. REIT performance improves, expense growth stays contained, and pipeline wins translate into sustained AUM and earnings expansion.