Asset Management

TIAA-CREF funds earn high rankings from Barron's/Lipper and Morningstar

  • TIAA-CREF funds rank among Top 10 in Barron’s/Lipper Fund Family Survey
  • More than half have Morningstar ratings of four or five stars
  • Target-date funds rank high in performance and competitive fees

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:

  1. A higher level of stock exposure to balance market risk with longevity risk (i.e., the risk of running out of money in retirement): TIAA-CREF designed its glide path to include above-average stock exposure to support the U.S. population’s growing life expectancy.
  2. Broader diversification to help manage risk and capture opportunities: The Lifecycle Funds offer exposure to specialized sub-asset classes—emerging markets stocks, and high-yield, emerging markets, and inflation-protected bonds—that can provide exposure to opportunities and potentially reduce risk by not moving in lockstep with core holdings. The funds also use two different money-management approaches—enhanced indexing and traditional active—to help manage risk.
  3. Low fees: Expense ratios for our Lifecycle Funds are lower than 75% of actively-managed target-date peer funds (bottom quartile ranking).3

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.

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