Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers fourth quarter and full year 2022 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question- and- answer session. At that time, if you have a question, please press star followed by the number one on your telephone. If at any time during the conference you need to reach an operator, please press star-zero . As a reminder, this conference is being recorded Thursday, January 26th, 2023. I would now like to turn the conference over to Brian Heller, Senior Vice President and Corporate Counsel of Cohen & Steers. Please go ahead.
Thank you, and welcome to the Cohen & Steers fourth quarter and full year 2022 earnings conference call. Joining me are our Chief Executive Officer, Joe Harvey, our Chief Financial Officer, Matt Stadler, and our Chief Investment Officer, Jon Cheigh. I want to remind you that some of our comments and answers to your questions may include forward-looking statements. We believe these statements are reasonable based on information currently available to us, but actual outcomes could differ materially due to a number of factors, including those described in our accompanying fourth quarter and full year earnings release and presentation, our most recent annual report on Form 10-K, and our other SEC filings. We assume no duty to update any forward-looking statement. Further, none of our statements constitute an offer to sell or the solicitation of an offer to buy the securities of any fund or other investment vehicle.
Our presentation also contains non-GAAP financial measures referred to as adjusted financial measures that we believe are meaningful in evaluating our performance. These non-GAAP financial measures should be read in conjunction with our GAAP results. A reconciliation of these non-GAAP financial measures is included in the earnings release and presentation to the extent reasonably available. The earnings release and presentation, as well as links to our SEC filings, are available in the Investor Relations section of our website at www.cohenandsteers.com. I'll turn the call over to Matt.
Thank you, Brian. Morning, everyone. Consistent with previous quarters, my remarks this morning will focus on our as-adjusted results. A reconciliation of GAAP to as-adjusted results can be found on pages 18 and 19 of the earnings release and on slides 16 through 19 of the earnings presentation. Yesterday, we reported earnings of $0.79 per share, compared with $1.24 in the prior year's quarter and $0.92 sequentially. Revenue was $125.5 million for the quarter, compared with $159.7 million in the prior year's quarter and $140.2 million sequentially. The decrease in revenue from the third quarter was primarily attributable to lower average assets under management across all three types of investment vehicles.
Our effective fee rate was 57.8 basis points in the fourth quarter, compared with 58 basis points in the third quarter. Operating income was $50.9 million in the quarter, compared with $82.6 million in the prior year's quarter and $60.1 million sequentially. Our operating margin decreased to 40.5% from 42.8% last quarter. Expenses decreased 6.8% when compared with the third quarter, primarily due to lower compensation and benefits expenses and lower distribution and service fees. Compensation and benefits expenses were lower in the fourth quarter when compared with the third quarter, primarily due to a reduction in incentive compensation to reflect the actual amount expected to be paid.
This reduction was more than offset by the sequential decline in revenue, and as a result, the compensation-to-revenue ratio was 36.4% for the fourth quarter. For the year, the compensation-to-revenue ratio was 34.9%, an increase of 40 basis points from last quarter's guidance of 34.5%. The decrease in distribution and service fees was primarily due to lower average assets under management in U.S. open-end funds. Our effective tax rate, which was 25.95% for the quarter, included a cumulative adjustment to bring the rate to 25.4% for the year, an increase of 15 basis points from last quarter's guidance of 25.25%. The higher effective tax rate was primarily due to the effect of the nondeductible portion of executive compensation on lower than forecasted pre-tax income.
Page 15 of the earnings presentation sets forth our cash and cash equivalents, corporate investments in U.S. Treasury securities, and liquid seed investments for the current and trailing four quarters. Our firm liquidity totaled $316.1 million at quarter end, compared with $269.9 million last quarter. As mentioned on previous calls, our business has become more capital-intensive. Potential uses of capital range from funding the upfront costs associated with closed-end fund launches and rights offerings, seeding new strategies and vehicles, co-investing in private real estate vehicles, and making various one-time investments to grow our firm infrastructure as our business scales. Our new corporate headquarters in New York City and the associated build-out and related technology infrastructure is an example of that.
In order to provide us with the financial flexibility to pursue these opportunities, earlier this week, we announced that we arranged for a $100 million three-year senior unsecured revolving credit facility. As you know, we have historically been debt-free, meeting our capital needs and commitments organically. Consistent with that long-term philosophy, it would be our intent to repay any amounts borrowed under the credit facility with cash from operations as soon as practical. Assets under management were $80.4 billion at December 31st, up slightly from $79.2 billion at September 30. The increase was due to market appreciation of $3.5 billion, partially offset by net outflows of $1.1 billion and distributions of $1.2 billion. Assets under management declined $26.2 billion from December 31st, 2021.
The decrease was due to market depreciation of $20.9 billion, net outflows of $1.6 billion, and distributions of $3.6 billion. Joe Harvey will be providing an update on our flows and institutional pipeline of awarded unfunded mandates. Let me briefly discuss a few items to consider for 2023. First, regarding our expected compensation to revenue ratio, we intend to balance the anticipated revenue decline that will occur from our year-end assets under management being about 12% below 2022's average assets under management with a disciplined approach towards human capital.
In addition to the increase in compensation expense from higher stock amortization, salary increases, and the full-year impact of our 2022 new hires, we plan on making controlled investments in our business in order to broaden our product offerings, expand our public and private distribution efforts, and most importantly, to maintain our strong investment performance. As a result, we expect our compensation to revenue ratio to increase to 38.5% from the 34.9% reported in 2022. Next, we expect G&A to increase 12%-14% from the $52.6 million reported in 2022. The majority of this increase relates to costs associated with our new corporate headquarters at 1166 Avenue of the Americas. Excluding these lease costs, we would expect G&A to increase 4%-6%.
By relocating to 1166 Avenue, we are able to expand our footprint and create a next-generation state-of-the-art working environment at more favorable economic terms. In addition, we intend to make incremental investments during 2023 in our existing technology, including the implementation of new systems that will add efficiencies and expand our capabilities, cloud migration, and upgrades to our infrastructure and security. We expect that sponsored conferences and travel and entertainment costs will increase in 2023 as business travel resumes to more normal levels. Finally, we expect our effective tax rate will increase to 25.5%. Now I'd like to turn it over to our Chief Investment Officer, Jon Cheigh, to discuss our investment performance.
Thank you, Matt. Good morning. Today, I'd like to briefly cover three areas. First, our performance scorecard. Second, how our major asset classes performed in the quarter. Finally, our 2023 investment outlook. In particular, I want to focus on real estate and topics such as how we expect public and private real estate to perform, our view on recent non-traded REIT redemptions, and our initiative to be a market leader providing research and advice to clients across both public and private real estate. Turning to performance, in the fourth quarter, four of nine core strategies outperformed their benchmarks. Over the past 12 months, eight of nine strategies outperformed. While our batting average in the quarter was lower than normal, the magnitude of underperformance by strategy was generally modest and all related to strategies that ultimately outperformed for the year.
Measured by AUM, 74% of our portfolios are outperforming their benchmark on a one-year basis, a decline from 81% last quarter. The biggest driver of the decline was the performance of our U.S. real estate focus strategy, which is more concentrated and has had greater weightings in small cap real estate stocks, which lagged during the year and the fourth quarter bounce back. This strategy has a 25-plus- year track record of 400+ basis points of annual alpha. While underperformance has occasionally happened, rectifying our track record here is a key investment priority. On a three and five-year basis, 99% of our AUM is outperforming, which is slightly down from 100% last quarter.
From a competitive perspective, 98% of our open-end fund AUM is rated four or five star by Morningstar, up from 97% last quarter. For the quarter, risk assets broadly recovered with global equities up 9.9% and the Barclays Global Aggregate up 4.6%. Our asset classes were led by natural resources up 17.1%, international real estate up 10.3%, and global listed infrastructure up 9%, then by U.S. REITs up 4.1% and core preferred securities up 3.4%. Digging into the detail, infrastructure continued to perform well, beating U.S. equities but modestly underperforming global equities. This performance narrowed year-to-date performance to only down 4.9% on the year, handily beating very negative performing broader equity and fixed income indices.
Sub-sector level performance dispersion during the quarter was high, with cyclical sub-sectors such as railways and reopening plays such as airports and toll roads outperforming. Midstream energy or pipelines reversed its earlier trend, underperforming in the fourth quarter, but still ending the year as the best performing sub-sector. For preferreds, the November CPI report and subsequent inflation readings supported the central bank hike deceleration that occurred in December. Central banks remained hawkish, but markets priced in falling inflation. They likely also began to price in a better growth outlook based on falling energy prices, warm winter weather, and the China reopening COVID policy change. Overall, the risk-reward profile in fixed income markets improved. For real estate, international REITs led the way up 10.3%, benefiting from those same dynamics, including a weakening U.S. dollar, while U.S. REITs were up only 4.1%.
The U.S. saw significant sector dispersion, with retail real estate up 17%-33%, while sectors such as self-storage and residential were down 7%-10% in the quarter. Global markets saw similar levels of performance dispersion, with markets in Europe up 20%-25% and Hong Kong and Australia up 12% and 18% respectively. Phased COVID reopenings combined with more divergent economic trajectories have strengthened the investment case for global real estate and the diversification it can provide. If we see this shift continue, I would expect investors to begin allocating more to global real estate, either incrementally or at the expense of U.S.-only REITs. While the quarter was generally positive, where does that position us for 2023?
At a high level, we believe inflation will continue to come down, but that it will stabilize at around the 3% level by year-end, which will prove to be the new normal. In order to get there, we think we will likely experience an average recession. Last, we think that over time, long-term interest rates should be a bit higher than where they are today. With that as our backdrop, we see the economy transitioning to early cycle by the end of the year and positive returns for all of our asset classes in 2023. For preferreds, we see very good absolute value, coupled with the fundamentals of our issuers remaining very strong, particularly balance sheets. Bank non-performing loans are moving up, but very gradually and from very low levels. Meanwhile, net interest margins have expanded with the higher rate environment.
From preferreds, we would expect potentially double-digit total returns in 2023. For infrastructure, we continue to expect the asset class to perform well. In the early cycle phase, it typically performs more in line with global equities. Despite that, we don't pound the table on infrastructure because of just 2023. Our conviction in the asset class is in its long-term strategic role in the new regime where the criticality of infrastructure businesses means demand is less economically sensitive. Plus, its pricing mechanisms tied to inflation will help even in a new normal inflationary environment. Those are multi-year benefits rather than for a single phase. In terms of how we see our biggest asset class, real estate, in 2022, U.S. REITs were down roughly 25% as the listed asset class repriced quickly to the changed macro environment.
In contrast, reported private real estate values generally increased as they tend to be historically lag as deal volume declines. For example, the NCREIF ODCE Index, a measure of private real estate, had a positive total return of 7.5% versus listed REITs of -25%. In 2023, we expect this trend to reverse, with listed outperforming private real estate consistent with what we normally see in a transition to early cycle. This performance shift of listed outperforming private has already started. In Q4, NCREIF was actually down 5%, while listed REITs were up 4%. Historically, listed REITs have performed remarkably well after recessions.
Since 1990, REITs have returned on average 10.8% 12 months after a recession and a notable 20.4% on average 12 months after early cycle recovery periods. Because of these lags, private real estate has typically declined on average 11.8% in the 12 months following a recession. By understanding the leading and lagging behaviors of listed and private markets, real estate investors can assemble a much more efficient portfolio and tactically allocate at different times across the two asset classes. We've always been the REIT experts, but we believe investors need integrated advice and research around both listed and private. This is why we've committed over the last two years to build out our solutions and advice business.
We strongly believe that our vantage point at this intersection of public and private real estate positions us to provide frameworks, models, and guidance for investors to help them be better real estate allocators. As an example, we've recently been sharing our thoughts and views on the non-traded REIT redemptions, which have been in the news recently. First, these redemptions do not reflect broad economic or systemic risk. The redemption limits are designed to protect the funds from having to liquidate significant real estate holdings at discounted prices or materially boosting leverage in response to elevated redemption requests. We do not see a disorderly unwind or panic selling scenario for real estate funds to meet redemptions. NTRs also only represent 1% of the $21 trillion commercial real estate market. The non-traded REIT story is not one of systemic risks or commercial real estate crashing.
It is simply that investors are rebalancing away from prices they believe are expensive and are seeking higher returns in other asset classes, including listed real estate. We believe the redemption activity underscores the potential rebalancing opportunity that exists for investors to pivot out of private and into listed real estate. With that, let me turn the call to Joe.
Thank you, John, and good morning. I will first discuss our fourth quarter business fundamentals and then follow with a review of our 2023 corporate priorities. The fourth quarter was weak, measured by the fundamentals that we focus on, yet hopefully represents the climax of what I have characterized as the greatest macro regime change in my career. If the fourth quarter has mostly reflected investor reactions to regime change, then hopefully the first half of 2023 will be the start of the transition to the next phase where after the resetting of financial asset prices, a new return cycle can follow. Our investment performance continues to be strong overall. One quarter does not change our strong long-term record, and we remain well-positioned to win investor allocations.
Notably, our market share, as measured by active open-end funds, continues to expand in U.S. real estate, global real estate, and global listed infrastructure, with U.S. real estate most notable at 37%. Our market share in preferreds has declined to 43%, which reflects more asset managers offering this strategy in response to investor views of preferreds as an attractive source of alternative income. We remain very competitive thanks to our performance and what arguably is the broadest range of preferred strategies and vehicles in the market. Firm-wide outflows in the fourth quarter were $1.1 billion, led primarily by preferreds at $873 million. Notably, and for the first time ever, all of our core strategies experienced net outflows.
Markets rallied in the quarter and all of our asset classes had positive returns, the outflows in the quarter had already been prompted by broader dynamics such as year-end tax loss selling and reallocations to cash and treasuries. Open-end funds dominated outflows with $1 billion out. Both our core preferred mutual fund, Cohen & Steers Preferred Securities and Income Fund, and our low duration preferred mutual fund had outflows totaling $819 million. In U.S. REIT funds, our flagship Cohen & Steers Realty Shares had outflows of $276 million, which included the completion of the redemption by a large allocator that we mentioned last quarter. Our real estate fund, Cohen & Steers Real Estate Securities Fund, which has a broader opportunistic mandate, had $210 million of inflows.
Flows in other segments of our open-end fund category were small by comparison, but we had inflows for the tenth straight quarter into our offshore SICAV vehicles and outflows from our UMA and SMA vehicles in the U.S. Institutional Advisory had outflows of $392 million. While redemptions from COVID-driven opportunistic investments have subsided, asset owners have been trimming portfolios for various funding needs such as benefits, private investment commitments, and overall rebalancing in light of market movements. Outflows from existing clients totaled $573 million. In the quarter, we had four new mandates fund a total of $242 million across four strategies. The largest being a global real estate mandate for $182 million from a European corporate pension fund. Sub-advisory ex-Japan was slightly positive at $27 million.
Japan sub-advisory continues its trend of inflows with $281 million, which netted to $44 million after distributions. The rotation out of technology and growth and the strength in the U.S. dollar contributed to Japan sub-advisory inflows. We expect to see increased marketing activity with our partners in Japan in 2023 as the country continues to reopen for business. We look forward to celebrating our 20-year anniversary with our key distribution partner, Daiwa Asset Management. Our one unfunded pipeline was $885 million at year-end, compared with $1.1 billion at the end of the third quarter, and the three-year average of $1.3 billion.
72% of our pipeline AUM is in global real estate strategies, led by a recently won completion portfolio, which is a customized strategy designed to complement existing private holdings by expressing allocations in the listed market that are cheaper or cannot be expressed in the private market. 50% of our pipeline is in Asia-Pacific, which is consistent with our recent commentary about emerging demand in the region for listed real assets. To set the table for our 2023 priorities, we are expecting that the macro environment over the next 12- 18 months will include the following elements. The Fed will over-tighten and will endure an average recession, as foreshadowed by the seemingly daily pace of corporate layoff announcements. The futures markets indicate that we should see the peak of monetary tightening at some point this year.
Sometime in 2023, and it's unknowable exactly when, we should see the emergence of a new return cycle as financial assets have already repriced and markets anticipate Fed easing as the economy stagnates. Inflation is expected to remain a wild card with root causes embedded in the system itself. In terms of investment strategy priorities, we believe that global listed infrastructure and multi-strategy real assets strategies are generally underrepresented in portfolios and will continue to gain share. Although infrastructure has been defending very well in the current volatile environment, institutional allocations have averaged only 4.6% compared with their targets of 6.6%. Our research has demonstrated how listed infrastructure can complement private infrastructure allocations through similar to slightly better returns and low correlations.
We'll continue to educate while broadening our investment offerings and universe to include energy transition and other secular opportunities. With respect to multi-strategy real assets, even though we expect inflation to come down, we believe investors are under-allocated to inflation solutions. We therefore expect demand to grow as the continuing risk of inflation states the case for insurance. We are expanding our educational outreach through our Real Assets Institute and our focus on customization, which includes plans to launch a solution using CIT vehicles to customize allocations for retirement plans. In terms of REITs and preferreds, we believe these asset classes are poised to benefit from the next return cycle, we expect to see attractive entry points over the next year. As John mentioned, listed real estate return cycles historically precede private.
Investors who utilize both markets, and more and more are, should be focused on allocated to the listed market now. We expect private real estate prices to correct, and that listed REITs will see acquisition opportunities at values 10%-20% lower than the peak in 2022 due to higher debt costs and slower growth. Our firm is now organized with deep expertise and resources to help advise investors on allocations between listed and private real estate and implement custom solutions. With respect to preferreds, Jon Cheigh characterized our favorable outlook, and accordingly, we're looking for ways to invest in the business. By example, we've seeded a new preferred strategy that is more global in composition with a focus on the large universe of foreign currency-denominated preferreds outside of the U.S. Our other strategic priority is private real estate.
With our expectation that prices should correct between 10% and 20%, we believe that sometime in 2023 we'll see emerging opportunities to deploy capital. After several confidential filings, on Wednesday, we publicly filed the registration statement for our non-traded REIT, Cohen & Steers Income Opportunities REIT. We're in registration, that is all I can say at this time. In addition, we continue to focus on other private real estate investment strategies for institutional investors. Finally, we have integrated our private and listed real estate capabilities with our real estate strategy group led by Rich Hill. They will help identify the best property sectors, geographies, and themes while identifying where real estate is the cheapest. Looking at distribution priorities, we recently filled a key position by hiring Kimberly LaPointe as Head of Wealth. Our core institutional and wealth teams are now fully staffed.
Incrementally, we are adding resources to focus on distributing the non-traded REIT and providing advice for optimizing real estate portfolios in the wealth channel. Specifically, how much real estate to have in a portfolio and how to divide that between listed and private. Consistent with emerging demand for real assets in Asia, we are expanding our sales capabilities there. In closing, we are highly focused on our priorities, and I believe well-organized to pursue them. This year will be key in helping clients adapt to regime change in the next phase, which will include shifts in allocations between asset classes, including listed versus private. In each case, calibrating for how the return and risk profile has changed and anticipating the new return cycles.
Our strategy with respect to resourcing is to ensure we have the talent to run the business, navigate regulation, and execute the new initiatives right in front of us, such as private real estate. We have set a higher bar with success-based triggers for any other roles. While some of our peers are announcing layoffs, we are in a phase of potential growth that requires resources, and we are committed to helping our clients achieve their objectives. Change creates opportunity, and we are committed to capitalizing on this for our clients and for our shareholders. Thank you for listening. Operator, please open the lines for questions.
Thank you. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, please press star -one again. Our first question comes from John Dunn from Evercore ISI. Please go ahead. Your line is open.
Thank you very much. maybe just to start off with, you know, a micro side. Fund-wise, you talked about, Realty Shares out flowing and, you know, Real Estate Securities inflow. What do you think in 2023 in the wealth management channel, what do you think is going to be inflowing versus outflowing?
Well, as I mentioned, John, you know, toward the end of last year, with REITs being down in the mid 20%, you know, as you normally would expect, we saw a lot of tax loss selling. I believe as you've identified, you know, looking at the mutual fund flow data, we've started to see improved flows this year, which, you know, kind of validates the shift from tax loss selling back to investors capitalizing on the decline in prices and the potential, you know, positive entry point that I described.
I think both Jon and I complimented it a little bit, identified that we think that they're going to be really good entry points for REIT investors in 2023. We would expect flows to improve for our open-end mutual funds.
Yeah. Yeah. The first two weeks definitely show that. On preferred, you know, what do you think, like, the next okay demand rate environment is? Not necessarily the, like, you know, when it's a leader, but less of a drag.
John, could you repeat that? There was some static, I didn't hear the question.
Sure. On preferred, what do you think the next best, like, okay demand environment is rate-wise?
Well, again, you know, Jon laid this out. You know, he was laying out a case for double-digit returns from preferreds. You know, one of the things that we've always experienced with preferreds, and considering that they have some of the highest income levels in the fixed income world is investors are very attracted to them, particularly when you consider the tax benefits on top of that. You know, one of the things that's changed at the margin is with, you know, fixed income yields up across the yield curve and across, you know, different sub-segment types, there's more competition for income. Again, preferreds still have some of the highest income rates out there. You know, we're thinking that between that and with the capital appreciation opportunity, Jon mentioned the double-digit return opportunity. I think, you know, once investors see kind of an all clear signal from the Fed that we will see inflows into our preferred vehicles.
Got you. You talked a little bit about the private real estate effort. Can you give a little more kind of like state of the union of, you know, not just now, but over the next few years, you know, what you think it's going to develop into?
Sure. Really for the past two years, we've been building a private real estate team. Consistent with our philosophy, we didn't try to go out and acquire something that was up and running. We built it piece by piece. I'd say we're gaining momentum on all fronts, including, you know, the capital raising front. I outlined kind of two vehicles that we are working on. You know, most importantly, our expectations that commercial real estate prices will correct 10%-20% this year, I think there's going to be a really great entry point for us to commence our track record. That's the thing that we are obsessed about is making sure we get that timing right.
Considering the private real estate business is a new business, we started with a really great track record. We're more focused on that than, you know, raising assets as fast as we can. You know, the next phase, you know, will be to get the non-traded REIT up and running. As I said, because we're in registration, we're not going to get into some of the things that are happening there. Our overall effort in private real estate is gaining momentum.
Got you. This is a question I get. You know, what do you think it takes to get U.S. infrastructure flows really going? Kind of the potential time frame, is it, you know, in 2023, or is it more in the out years?
Well, I would say for infrastructure overall, on the institutional side, it's probably one of the most active areas that we have. Our, you know, pipelines, and we, you know, we characterize it in terms of things that are, you know, specific active searches, and then behind that, there's shadow pipelines with investors that are thinking about it. I'd say it's one of the most active areas that we have. You know, that's been enhanced recently by how infrastructure has performed in this environment. On the wealth side, we've gotten a little bit of a pickup from all of the current administration focus on infrastructure. Infrastructure spending has been a great advertisement for infrastructure. Our flows into our open-end funds have improved. You know, I think that it's still early days in terms of the, a broader adoption of infrastructure in the wealth channel.
John, I would only add, you know, we're seeing certainly more interest in the wealth channel for infrastructure. You know, our fund there, CSUAX, was, you know, upgraded to five stars a few months ago. You know, we've seen with all of our other funds, you know, obviously when you go from four to five stars, we can see a pretty meaningful shift in investor interest. We're optimistic.
Got y. You guys have a lot of growth engines, you know, which everyone recognizes. You know, maybe to distill it down a little bit, if you think about your regions as being U.S., Asia, Europe, and now like sovereign wealth funds in the Middle East, what's the number one thing in each of those regions that you think is going to do best in 2023?
Well, let me start with the U.S. I think our wealth business is one of our larger businesses. You know, when, you know, the conditions are right for wealth, you know, that can really have the biggest impact on the business. You know, I would say with some of the private real estate things that we're doing, you know, Jon mentioned it, I mentioned it in terms of our vision of being able to help the wealth channel with real estate allocations. You know, considering all of the mandates by the largest firms to increase alternatives weightings in portfolios, I think that's something that in time can really help our market share in the wealth channel.
Just, you know, sticking with the U.S., you know, when you look at our shadow pipeline, you know, there's some very large pension plans that are conducting searches for strategies like U.S. real estate, global infrastructure, and our multi-strategy real assets portfolio, which is consistent with the comments around investors looking backward, not needing inflation protection. That obviously has changed. You know, the U.S. is one of the biggest markets, and sort of considering our presence in both wealth and the institutional channel, I think could have the biggest, you know, overall impact on the business. In Europe, we've talked about what's going on in the Middle East.
That's most active in real estate and in the infrastructure. Elsewhere in Europe, it's one of the interesting things is that, you know, they've been allocating to our also to our multi-strategy real assets portfolio. Asia is as we've talked about in the past couple of calls, say on emerging, you know, demand front for listed real assets. That's going to focus on mostly on real estate, but infrastructure to a lesser extent. Because of some of the mandates that we've won and the mandates that are in competition still, we want to boost our sales presence in Asia, because if they've now begun to adopt, we want to make sure we establish our market position. These are mandates coming from, you know, sovereign wealth type funds from Thailand, Malaysia, and Korea. Overall, just again, based on size and based on our presence, our rank order is, you know, U.S. The U.S. is the largest and most influential on the overall business. The Middle East and Asia are kind of emerging areas of demand.
Right. Yeah, on that, on that last one, you know, can you frame for us, you know, the what inning maybe we are in the shift from private real estate to public? I s that, you know, just a rebalancing thing or a couple quarter thing or a multi-year thing?
Just in terms of the return cycle, I'm going to let Jon elaborate on that just to start.
Hey, John. As we mentioned earlier, you know, again, last year, U.S. REITs were down 25%. Private, I think, was, you know, up 7% or 8%. You know, there's been a 30%+ gap from a performance standpoint. Of course, no one exactly knows how much of that gap from a performance standpoint we expect to close out. You know, we could see, you know, in relative terms, you know, probably 10%-20% outperformance, you know, over the next 12-18 months between, again, how the private market has been valued and how the public market has been valued. It's pretty significant. Of course, for different kinds of investors, their ability to take advantage of that from a tactical standpoint.
You know, for some of the large sovereigns and other institutional investors, you know, they're in inflow mode. They have capital to put to work. I think for institutions like that, they're able to rebalance where they are investing incremental capital. We are certainly seeing that. You know, a lot of these conversations with institutions, they've been going on for 12 months, 24 months. You know, this is similar to what we saw in 2020. You have those conversations, people feel like they missed something, and then they get the opportunity. Sometimes they're a little bit nervous because things are going down. You know, as things start to stabilize, they get into a position to take advantage of opportunities. We think we're transitioning from this. Everything is volatile, everything's are correctly.
People don't want to buy the falling knife to people are in a better position to take advantage of where they see relative value. I think for institutions like that, they can certainly take advantage of it. Look, I talked about what's happening on the non-traded REIT side. I think that the redemptions are a symptom of investors recognizing that most things in their portfolio, including listed REITs, went down 10%, 20%, 30% last year, and some things didn't. That creates a really good rebalancing opportunity. I think the redemption activity is an outcome of the relative value that's been created. I definitely think we're going to see some shifts at the margin in the wealth side, which we're already seeing.
Right. Yeah. On that last point, you know, beyond the right now, how would you kind of categorize the closed-end fund window? Do you have, you know, a target for the number of launches per year?
We don't have a target for the launches per year. We have ideas that we think are great ideas for the closed-end fund market. As you know, right now it is closed. It's been closed for, you know, well over a year. You know, the market volatility and, you know, interest rate cycle, you know, had the most effect on that. You know, one of the things that has been happening as we get further along in the interest rate cycle is that the discounts on some of our closed-end funds have been narrowing. Just by example, our listed infrastructure fund has been trading, you know, pretty close to NAV.
You know, I expect that once we get to the end of the tightening cycle and closer to the easing cycle, some of these discounts will have closed fully and perhaps gone to premiums, and then the conditions are set, you know, will set up for the new issue market to open up. You know, right now it's not factored into our planning other than we have investment ideas that we think are good. You know, it's going to take a while before the new issue market opens up.
Got you. Then maybe turning to the institutional side, you know, like 10 years ago, your guys' pipeline was on, you know, on average about $500 million, and then it kind of leveled up to $1.5 billion, you know, often plus that. Do you think over the next maybe, you know, few years, is there ability to level up again at some point to, you know, get consistently above maybe $2 billion? Is that even an aspiration?
You know, that's not something that we can predict. You know, I'd say in my comments that it's averaged $1.1 billion for the last three years, which includes, you know, a favorable environment for investing in our asset classes. I would expect this adoption of real assets to continue and as you know, the environment gets better that we should revert back to that level. When you think about what we've invested in our distribution capabilities and the fact that we've expanded those markets, I would expect something , you know, a multiple to be, you know, added on to that. I don't know what that number ends up being, but, you know, I would be disappointed if we didn't get into the $1.5 billion, you know, to plus, you know range, you know, as we get back into more normal environments.
Makes sense. Okay. I got this question recently. You know, what's kind of like the profile of your REIT competitors? Are people exiting the space? Are they shrinking? Are the larger players getting larger? What's going on with, you know, REIT investing competition?
Well, the first thing is, you know, Joe mentioned how much our market share in active REITs have grown. The first thing is, I'm not going to say if all of our competitors have shrunk significantly, but, you know, over the last 10 years, there have been some competitors that have gone away, and there are some that have shrunk in considerably. You know, and over the last 10 years or so, there have certainly been other competitors or, players in the space that have been in favor. I would say, to be honest, you know, because they had good performance, and then sometimes they've gone out of favor.
I think we've been consistently in the mix because we've been consistently top quartile, even though who has been in that top quartile has waxed and waned over time. We continue to take market share because we're putting up consistent performance. We have a consistent team, and our platform is very healthy. We are able to continue to, you know, invest in our people, invest in the resources that we need. You know, and the resources we needed 20 years ago, you know, they're very different today. I think our clients and prospective clients see that we're investing on the macro side, on the risk side, on the data side, on the quantitative side. All those things have allowed us to evolve and, you know, keep getting better.
I would just add a perspective on that, John, from the wealth, you know, channel, which is that, you know, with the adoption of, you know, private strategies in the wealth channel, we have a new competitor. While we have done extraordinarily well versus our active, you know, peers in open-end funds in the wealth channel, and we've also had to compete against passive strategies which have gained share versus, you know, active, as you know. We're now competing with the private equity firms who are offering, you know, private or semi-private real estate solutions in the wealth channel.
You know, that is a big part of our, you know, the impetus for us to create a vehicle in private real estate for the wealth channel and a vehicle that is a little differentiated. It's to help take advantage of the opportunity that we see to help advisors optimize their portfolios. You know, the private equity firms aren't going to do that, right? They're going to try to optimize their, you know, private allocations. They're not going to help advisors add listed allocations to that. You know, for us, it's on one hand a competitive challenge, on the other hand, it's a great business opportunity, investment opportunity for the wealth channel.
Oh, it's there. Just last one, maybe more big picture. you know, when I think about Cohen & Steers over the last phase, I think of you guys broadening in the strategy you want to be in, getting deeper in the wealth management channel, revamping U.S. advisory, and adding private real estate. you know, now that you're driving, Joe, what's your vision for the next few years?
It starts with creating, you know, great investment performance and then maximizing all of the investments that we have made in distribution and, you know, capitalizing on just the overall position of us as a real assets provider. Looking backward, you know, we've mentioned our multi-strategy real assets, you know, portfolio a couple times. You know, because inflation hasn't been a thing, you know, that hadn't met its full potential. When I look at how we're positioned today, you know, we've invested in the distribution, in vehicles. I think now's our time to, you know, maximize our market share of, you know, the potential for real assets in investor portfolios while, you know, adding private real estate to the mix.
Great. Thank you very much. Much appreciated.
We have no further questions in queue. I would like to turn the call over to Joe Harvey, Chief Executive Officer of Cohen & Steers, for closing remarks.
Great. Well, thank you everyone for your time this morning. We look forward to speaking with you next in April when we release our first quarter results. Have a great day.
This concludes today's conference call. Thank you for your participation. You may now disconnect.