TIAA-CREF mutual funds and annuities achieved high rankings among competitors—based on factors that include investment returns, risk management, and fees—according to two leading independent rating agencies.
Our mutual funds ranked among the top 10 in one-year performance in 2012, among 62 fund families in the latest Barron’s/Lipper Fund Family Survey, based on Lipper performance data.1 The top-10 rating continues a positive trend moving the funds from 48th place in 2009 to 13th in 2011 and now to 10th in 2012. TIAA-CREF also ranked fourth in the individual one-year Mixed Asset category, which includes our target-date fund series, the Lifecycle Funds.
Active management contributes to fund performance
The Barron’s/Lipper survey reflects strong performance across the TIAA-CREF mutual-fund family. Our steady advance in the rankings largely reflects the impact of proprietary investment research conducted by more than 300 portfolio managers, research analysts, and traders in our Asset Management business. The economy’s accelerating recovery in 2012, coupled with a decline in market volatility, allowed active management and research to play a stronger role in driving investment returns.
Top-10 ranking follows high ratings by Morningstar
The Barron’s/Lipper results confirm our 2012 ratings from Morningstar. More than half (53%) of the firm’s mutual funds and variable-annuity accounts received four- or five-star ratings.2 In all, 98% received three or more stars, while only 2% received two stars or less—an indication of TIAA-CREF’s investment-process consistency and efforts to manage downside risk. Morningstar ratings are based on past risk-adjusted performance compared to competitors in the same fund category.
“These independent ratings are important validations of the value we provide our investors and retirement-plan participants,” says John Panagakis, Senior Managing Director and Head of Asset Management Business Development. “The Lipper ratings highlight pure performance, whereas Morningstar emphasizes risk-adjusted returns. We scored high in both, demonstrating our commitment to a disciplined investment approach incorporating twin objectives: competitive returns at below-average fees—and effective risk management.
Target-date funds benefit from smart strategies and low expenses
TIAA-CREF was among the few top-10 firms in the Barron’s/Lipper Fund Family Survey that also achieved top-10 standing in the individual one-year Mixed Asset category. This category includes our Lifecycle Funds with an asset allocation (or “glide path”) that gradually shifts to a more conservative asset allocation as the retirement date approaches.
TIAA-CREF Lifecycle Funds offer three advantages supporting their competitive performance:
The 2012 Barron’s/Lipper Fund Family Survey was published in the February 11 edition of Barron’s. The survey rankings are purely quantitative, based on Lipper fund performance data. Each fund family receives a composite, asset-weighted score based on five asset classes: U.S. Equity, World Equity, Mixed Asset, Taxable Bond and Tax-Exempt Bond. Scores for each asset class are weighted according to its size within the Lipper universe.
1 The rankings are quantitative, and are based on performance according to Lipper data. Each fund family is given an asset-weighted score within the five asset classes: U.S. Equity, World Equity, Mixed Asset, Taxable Bond and Tax-Exempt Bond, and the asset class score is then weighted by its size within the Lipper universe. TIAA-CREF ranked 29th out of 43 mutual-fund families in Lipper’s five-year ranking. The Lipper/Barron’s Fund Family survey uses an asset-weighted ranking system. Each fund’s return was measured against all those in its Lipper category, and the resulting percentile ranking was then weighted by asset size relative to the fund family’s other assets in its general category. The family’s overall ranking was then determined by weighting the five fund categories in proportion to their overall importance within Lipper’s fund universe. In the five-year overall ranking, TIAA-CREF is ranked 29th out of 53 mutual fund families. TIAA-CREF does not qualify for the 10-year ranking.
2 As of December 31, 2012, 45% have three stars, 44% four stars and 9% five stars. The Morningstar ratings include Retail, Retirement, Premier and Institutional fund share classes; CREF Accounts and the Life Funds. 53% of our funds/accounts having an overall rating of 4 and 5 stars and 98% are rated 3 or more stars. Morningstar is an independent service that rates mutual funds and variable annuities. The top 10% of accounts in an investment category receive five stars, the next 22.5% receive four stars, and the next 35% receive three stars. Morningstar proprietary ratings reflect historical risk-adjusted performance and can change every month. They are calculated from the account’s three-, five- and ten-year average annual returns in excess of 90-day Treasury bill returns with appropriate fee adjustments, and a risk factor that reflects mutual fund/subaccount performance below 90-day T-bill returns. The overall star ratings are Morningstar’s published ratings, which are weighted averages of its three-, five- and ten-year ratings for periods ended December 31, 2012.
3 TIAA-CREF Lifecycle Funds Retirement Share Class expense ratios vs. Morningstar U.S. Open-End Mutual Fund Target Date peer group, effective 12/31/2012.
TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, or visit www.tiaa-cref.org. for details. Past performance does not guarantee future results.
Please note, the target date for LifeCycle funds is the approximate date when investors plan to start withdrawing their money. The principal value of the fund(s) is not guaranteed at any time, including at the target date.
Diversification is a technique to help reduce risk. There is no guarantee that diversification will protect against a loss of income.
You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161, or go to www.tiaa-cref.org for a current prospectus that contains this and other information. Please read the prospectus carefully before investing.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.