TIAA-CREF Lifecycle Funds ought to serve its investor base relatively well due to its mix of assets and low expenses, according to a recent report by Morningstar, Inc. that rates the funds “Above Average.”
TIAA-CREF’s Lifecycle Funds are designed to provide a single diversified portfolio to investors with a target retirement date in mind. Each portfolio invests in underlying equity and fixed-income funds offered by TIAA-CREF Funds. Over time each Lifecycle Fund’s asset allocation will become more conservative by increasing the percentage of assets invested in the underlying fixed income funds as the investor nears retirement.
Morningstar praised the Lifecycle Funds glidepath, or the formula that determines the amount invested in the underlying equity and fixed income funds over time, as being well suited to the needs of its participants. Because TIAA-CREF participants tend to live longer than average, the Lifecycle Funds feature a “healthy equity weighing” to provide opportunities to accumulate more money when a participant is first saving that will then support income needs through a long retirement, according to Morningstar.
TIAA-CREF management’s interests are also aligned with fund shareholders, according to Morningstar. Fund manager Hans Erickson’s high level of investment in the Lifecycle Fund series sets an industry best practice, according to Morningstar.
The funds’ expenses are also among the lowest-cost among actively-managed target-date funds, according to Morningstar. Low expenses provide a “decided long-term edge” for investments such as target date funds that are held for many years, according to Morningstar. You can learn more about TIAA-CREF Lifecycle Funds by clicking here1,.
1 As with all mutual funds, the principal value of the Lifecycle Funds is not guaranteed. The target date of the Lifecycle Funds is an approximate date when investors may want to begin withdrawing from the fund. Approximately seven to ten years after a Lifecycle Fund's target date, the fund may merge into the Lifecycle Retirement Income Fund or a similar fund.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
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