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Cohen & Steers Launches Active Preferred Equity ETF (CSPF)

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  Published in Stocks and Investing on Thursday, February 19th 2026 at 2:30 GMT by Seeking Alpha
      Locales: UNITED STATES, CAYMAN ISLANDS

Thursday, February 19th, 2026 - Cohen & Steers (COH) has entered the increasingly competitive ETF space with the launch of the Cohen & Steers Capital Preferred Equity ETF (CSPF). This new offering targets the often-overlooked preferred equity market, promising investors a combination of high current yield and potential capital appreciation. But in a market saturated with passively managed, low-cost options, does the active approach of CSPF justify its expense ratio? This article provides an in-depth look at the fund, its strategy, potential benefits, and inherent risks.

Understanding Preferred Equity

Before diving into the specifics of CSPF, it's crucial to understand preferred equities. These securities represent a hybrid asset class, possessing characteristics of both bonds and common stocks. Like bonds, preferred stocks pay a fixed dividend, typically offering higher yields than traditional corporate bonds. However, unlike bonds, preferred stocks represent ownership in a company - though without the same voting rights as common stockholders. This places them below common stock in the capital structure, making them generally less risky than common equity but more risky than bonds. The sweet spot between fixed income and equity is precisely where preferred equity aims to reside, offering a potentially attractive risk-reward profile for certain investors.

CSPF: Strategy and Key Features

The Cohen & Steers Capital Preferred Equity ETF (CSPF) isn't simply a tracker of a preferred equity index. It is actively managed, meaning a team of portfolio managers at Cohen & Steers are making decisions about which preferred stocks to hold, based on their analysis of market conditions, creditworthiness of issuers, and potential for price appreciation. This is a significant differentiator. While passively managed preferred equity ETFs exist, they are constrained to mirroring their underlying index, regardless of perceived overvaluation or credit concerns.

Key details of the fund:

• Investment Objective: To generate a high level of current income while seeking capital appreciation.
• Investment Strategy: Active selection and management of a diversified portfolio of preferred stocks.
• Expense Ratio: 0.79% - a factor we'll discuss in more detail later.
• Benchmark: ICE BofA US Preferred Preferred Index - providing a useful comparison point for performance evaluation.

Cohen & Steers brings considerable expertise to this space. The firm has a long history of specializing in niche income-generating asset classes, including preferred securities and real estate. This focused approach suggests a potentially deeper understanding of the preferred equity market than many generalist asset managers.

The Case for Active Management in Preferred Equity

The preferred equity market, while offering attractive yields, isn't always efficient. Opportunities for mispricing and undervalued securities can emerge, particularly given the complexity of analyzing the credit risk of individual issuers. CSPF's active management team aims to exploit these inefficiencies. By actively shifting the portfolio's composition, they hope to outperform the benchmark index and deliver superior returns to investors. They can potentially rotate into stronger credits, avoid deteriorating situations, and capitalize on specific market opportunities that a passive ETF would miss.

However, Active Management Isn't Free The 0.79% expense ratio is a critical consideration. It's slightly above the average for ETFs focused on preferred equity and significantly higher than many passive index trackers. Investors need to carefully assess whether the potential benefits of active management - outperformance and downside protection - outweigh this additional cost. Performance data following the ETF's launch will be essential in evaluating if the active management strategy is delivering sufficient value.

Navigating the Risks

Like all investments, CSPF is not without risk. Understanding these risks is paramount before investing:

• Interest Rate Risk: Preferred equities are highly sensitive to changes in interest rates. When interest rates rise, the value of existing preferred stocks generally falls. This is a major risk in the current economic environment, and active managers will need to skillfully navigate interest rate fluctuations.
• Credit Risk: The financial health of the companies issuing the preferred stock is crucial. If an issuer experiences financial distress, the value of its preferred shares could plummet. CSPF's active managers have a responsibility to rigorously assess the creditworthiness of each issuer in the portfolio.
• Market Risk: While preferred equities are generally less volatile than common stocks, they are still subject to overall market conditions. Economic downturns or periods of market uncertainty can negatively impact the performance of CSPF.

Is CSPF Right for You?

The Cohen & Steers Capital Preferred Equity ETF (CSPF) offers a compelling proposition for investors seeking high current income and potential capital appreciation through exposure to the preferred equity market. Its active management strategy, backed by a seasoned asset manager, could provide an edge in this complex asset class. However, the 0.79% expense ratio requires careful consideration. Investors should weigh the potential benefits of active management against the cost, and thoroughly understand the inherent risks before adding CSPF to their portfolios. For those seeking a truly passive, low-cost option, alternative preferred equity ETFs may be more suitable. For those willing to pay a premium for active management expertise and potential outperformance, CSPF deserves a closer look.