How AI's Physical Demands Are Reshaping Real Asset Investing

0:00Alex Burke, Senior Vice President, Head of ETF Sales, Cohen Steers. Welcome back to the program. We were talking about you have different themes here and what you're going on today. You bring us CSRA ETF. Tell us about that. Yeah, so CSRA is the Cohen and Steers real assets active ETF. This is designed to provide investors a one ticker solution to a diversified and more importantly actively managed solution for real assets. What we think about it, Cohen, is Steers are the core four with real assets. This is listed real estate securities, global listed infrastructure, natural resource equities and commodities. I think the value proposition for CSRA is has to do with the fact that investors who want to allocate to real assets. They may not want to allocate amongst the underlying sectors. This is going to be more of a streamlined balance solution to be able to utilize it with

1:00in portfolios. I think it says a lot of threads into our market outlook right now. When I think about the portfolio construction that you're doing, I mean you talked about different themes and how something like this can now look at and we have inflation. You said things that will now work going forward for themes in the physical economy for example right. Yep. Yeah, so real assets are very much tied to the physical economy. I mean real assets and general it's just take a step back. These are the physical hard structures and raw materials that make up the real economy and there are aspects to them. They're very much tied to high inflation and high inflation sensitivity. But beyond that I think real assets are very much tied to a lot of key secular themes that your viewers are probably reading about in financial media every single day. So these include things like AI infrastructure build out, electrification, rising power demand, deglobalization and the impact on supply chains, resource

2:01scarcity, things like that. So it's not just an inflation story. There is a current secular theme story and ample growth opportunities. We think about the evolution of ETFs. I know you and I were speaking in the break and saying how another record here for ETFs but we think about the growth that we're seeing. You talked about growth the next phase for to have differential exposure. That's this. Is that right? Yeah absolutely. I mean you think about what's going on in the ETF space right now. I mean we've seen 1.2 trillion through the end of Q2 go into ETFs and no doubt core portfolios are going to be built largely with passive exposures but we're seeing investors start to explore a lot of active ETFs for specific things regarding outcome oriented strategies. Right. So whether this is looking for ways to diversify portfolios, manage risk, downside protection, generate income, protect against inflation, you know access, specialize the asset classes. This is where active ETFs can shine. And what's interesting is that

3:02you know you look at the flows year to date into active. They're occupying about 37% of all ETF flows in 2026 through the end of Q2. I should remind your viewers that only six years ago or so those numbers were well well below 10%. So we're seeing this demand come really for the need for these outcome oriented strategies. Investors wanted to access differentiated return streams. Right. They realize that with active investing you can maybe get a better return and you know taking out some of the laggards or being a little more stringent. You mentioned AI, right. Let's go into that more too because we have electrification, infrastructure, the power demand, the changing demographics, the supply chain. You mentioned that and some of the names that showed up the holdings within this particular ETF are not necessarily names people know. But you say they are correlated at least in some with AI. Yeah. Yeah. I mean if you think about AI at the application layer it is very much digital but underneath it is intensely

4:07physical. If you think about how AI is powered you know it needs massive amounts of energy you know data centers are a big part of the story that your viewers are probably reading about every single day but it also has to do with cooling systems and transmission networks and cell towers and stuff like that. So we think very much today the world is broadened out in terms of AI and it's very much a physical economy story tied around AI but I don't want to limit the real asset story just just to AI. I mean there's a lot of really interesting things going on right now elsewhere. It happened to do with I mentioned like de-globalization resource scarcity and things of that nature. How many names are NCSRA? There's about four anywhere between 40 to 60 or so is typically like a target of what we'd see. So let's say at Coen this year's we really are like a selection alpha oriented manager so whether you're talking about you know our other strategies or CSRA in general we are very much looking for high conviction ways to implement these types of exposures.

5:07Okay but we're also thinking about the top down macro views as well and how you can think about you know allocating across these different sectors so. Alex thank you so much CSRA. Alex Berg, Senior Vice President head of ETF sales, Coen and Steers.