Asset Management

White Papers


In-depth analysis and investment expertise from TIAA-CREF Asset Management.

March 24, 2015
U.S. Commercial Real Estate Outlook: The Return of Volatility

What does 2015 have in store for U.S. commercial real estate (CRE)? In this paper, we review the past five consecutive calendar years of double-digit performance and return drivers, and examine the factors that CRE investors should consider when looking ahead to 2015. We conclude that prospects are bright, and that volatility is an important factor for investor to monitor as they assess their CRE portfolios in 2015.

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March 13, 2015
Prepare for rising rates: Taking a fresh look at portfolio allocations
Daniel Morris, CFA, Global Investment Strategist

Consider diversifying bond portfolios with high-yield and emerging markets bonds. Developed and emerging market stocks have tended to outperform U.S. stocks during past rate hikes.

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February 26, 2015
Dollar Power: Implications of a rising dollar
Daniel Morris, CFA, Global Investment Strategist

Executive Summary:

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January 26, 2015

How low can you go? The risks, and rewards, of deflation

Executive Summary

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January 13, 2015
Creative Construction: A general shift in the U.S. industrial sector
The U.S. industrial sector is undergoing a generational shift as demand is growing for new bulk warehouses which have the design features required by the nation’s largest retailers, manufacturers, third party logistics providers, and e-commerce companies. Required design features which enable companies to achieve operational efficiencies and cost savings include larger facilities, higher building clear heights, energy efficient building systems, gated yards and secure trailer parking. The shifting needs of warehouse users points to better investment prospects for contemporary warehouse stock and has important implications for investment strategy.
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December 29, 2014
The Roots of Innovation
What were the biggest changes in the target-date fund space in the past ten years?
In this article, CIO Editor-in-Chief Kip McDaniel discusses evolutions in the target-date fund space with TIAA-CREF’s experts Randall Lowry, Elina Steinberg, and John Cunniff, including:

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December 22, 2014
2014 Global Real Estate Strategy and Research Compendium
Explore the Global Real Estate Strategy and Research Compendium, for the teams 2014 perspectives and insights of real estate investing.
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November 20, 2014
With the end of quantitative easing, the U.S. enters era of gradually rising interest rates
Anupam Damani, CFA, Portfolio Manager, Emerging Markets Debt; Joseph Higgins, CFA, Portfolio Manager, Multi-Sector Fixed Income

Executive Summary

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November 11, 2014
Chasing Yield? Target & non-target market performance in the current recovery
The low-yield investment environment has resulted in a global glut of capital seeking yield. This push for yield has impacted investment returns across asset classes and, at times, produced some curious results, with the performance of some time-tested strategies breaking away from their historical norms. For example, the U.S. real estate investment trust (REIT) sector recently experienced an extended “junk” rally, where “higher-yielding, lower-quality” REITs outperformed their “lower-yielding, higher-quality” counterparts. Has the private U.S. real estate market had a similar experience? This paper explores the performance of our target (“lower-yielding, higher-quality”) and non-target (“higher-yielding, lower-quality”) market portfolios across different property types during the current real estate recovery.
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October 28, 2014
REITs and Real Estate: Complementary through good times and bad
In this paper, we re-affirm that REITs and real estate function in a complementary fashion in investment portfolios. Using data through mid-2014, our analysis shows that investor portfolios that contain both REITs and real estate can enjoy higher return, higher risk-adjusted return, and lower volatility than portfolios comprised of a traditional 60% stock/40% bond mix.
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October 22, 2014
Positioning bond portfolios for rising interest rates:
Four factors to consider in designing an effective fixed-income strategy

As the U.S. economy continues on its steady, moderate growth trajectory and the Federal Reserve's third wave of quantitative easing (QE) asset purchases comes to an end, a question at the forefront of investors' minds is how to position portfolios for the rise in interest rates that is likely to follow. This paper examines four factors – diversification, active management, macro factors, and alternatives to fixed income – that investors should consider as the prospect of rising interest rates comes into focus.
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September 22, 2014
Counting Cranes: Supply Discipline & Apartment Market Performance
Solid performance, strong capital flows, and expanding debt availability have created an environment that is ripe for new construction and apartment developers have aptly responded. Although forecasters expect the new supply to be well-digested, investors still worry about its impact on investment performance. Recognizing the materiality of new multifamily supply, this paper explores apartment market “supply discipline” and its relationship with total return performance. The results clearly show that supply discipline, as well as absolute rent growth, matter for investors seeking total return outperformance in apartment markets.

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September 22, 2014
Socially Responsible Investing (SRI): Delivering competitive performance
A TIAA-CREF analysis shows that SRI indexes delivered market-like returns and risk over the long term. Performance was comparable to broad market indexes, despite using a smaller universe of stocks meeting environmental, social, and governance (ESG) criteria. Summary:

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Socially Responsible Investments are subject to the risk that because social criteria exclude securities of certain issuers for non-financial reasons, investors may forgo some market opportunities available to those that don't use these criteria


September 12, 2014
Cap rates rising: Well maybe next year...
Last year, analysts looked toward 2014 with expectations that interest rates would rise in response to the rising cap rates. Despite anticipations, interest rates have remained staggeringly low along with the 10-year Treasury yield. In this new paper, Martha Peyton and Ed Pierzak examine the cause for the delayed rise and implications for real estate investors.

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July 31, 2014
Awaiting the Cranes: Supply Discipline and Office Market Performance
What is a “supply-disciplined” market? Is there a connection between supply discipline and total return performance? This report examines this relationship within the US office markets and concludes that the best investment performance is composed of a combination of strong demand growth and measured new construction.

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April 14, 2014
The enduring case for high-yield bonds
Are high-yield bonds worth the additional risk at today’s high prices and record-low yields? Our research makes the case for a long-term, strategic allocation to high yield as a distinct asset class. High-yield bonds are effective diversifiers for stock and bond portfolios, helping to potentially reduce volatility and enhance returns. Beneficial characteristics include:

Investors should consider the impact of credit quality when selecting among the range of high-yield bond ratings. Our research shows that bonds rated Caa-C have had lower risk-adjusted returns than bonds rated Ba or B – and may not fully compensate investors for potential default losses.

Read our updated high-yield white paper now (PDF)

High-yield bonds are subject to interest rate and inflation risks, and have significantly higher credit risk than investment-grade bonds.

March 14, 2014
How is a generational shift impacting investment performance in the office sector? Where are the opportunities for investors?
This paper examines the forces associated with the demographic shift known as Gen Y and the drive toward “creative space” in office design, which is intended to appeal to the tastes of young “millennials.” Authors Martha Peyton, PhD, and Edward F. Pierzak, PhD, advise real estate investors to consider:

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January 9, 2014
It's all relative: Assessing global real estate investment opportunities
With the continued globalization of financial markets, more investors are seeking to construct global property portfolios. But, what is the best way to assess relative value across countries? In this new white paper, It’s all relative: Assessing global real estate investment opportunities, Martha Peyton, Edward F Pierzak and Timothy Francis of TIAA-CREF's Global Real Estate Strategy & Research team describe an analytic process that uses available data to identify countries with relatively equivalent country risk and abundant liquidity in order to help investors evaluate global real estate opportunities.
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January 6, 2014
Private real assets: Improving portfolio diversification with potentially uncorrelated market exposure.
Private investments in real assets – farmland, timberland, and commercial real estate – offer the potential to enhance returns and diversify risk in institutional portfolios. Real assets have exhibited higher returns and lower volatility than stocks and bonds, with low or negative correlations. Historical analysis using index returns for the 21-year period, 1992-2012, showed:
  • Each category of real assets increased risk-adjusted returns in stock/bond portfolios
  • Low correlations support the case for diversifying with multiple categories of real assets
  • Real assets provided higher risk-adjusted returns than public commodities and REITS
  • Real assets’ limited availability suggest restricting allocations to practical levels, such as 10% to 20%

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December 23, 2013
2014 Outlook: Accelerating economy and normalizing markets
What is our view on markets and world economies in 2014? Chief Economist Tim Hopper and Global Investment Strategist Daniel Morris recently published a white paper outlining the major economic and market themes that investors should consider in 2014. The “2014 Outlook: Accelerating economy and normalizing markets” outlines how the U.S. economy will accelerate to 2.8% in 2014, propelled by consumer demand, employment gains, and the housing market. And despite rising interest rates as the Fed tapers quantitative easing, the bull market in U.S. stocks should continue. Reasonable valuations, earnings growth, and the global economic recovery will create opportunities in the U.S. and abroad. For more insights, read the white paper (PDF)

September 26, 2013
Taking the high road: Do higher-yielding property markets pay?
Have major property markets become too expensive? Is it time to pursue higher-yielding markets? Read the latest white paper from TIAA-CREF's Global Real Estate Strategy & Research team to learn why they believe that chasing yield does not guarantee superior total returns.
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September 3, 2013
Lifecycle Funds in a rising interest-rate environment
Amid an improving U.S. economy and speculation that the Federal Reserve may begin to transition away from stimulative monetary policies that have helped keep interest rates at historic lows, TIAA-CREF Lifecycle Funds investors may be wondering how a rise in rates could affect their Fund performance. This question is particularly relevant for investors who are nearing retirement and whose Lifecycle Fund portfolios, by virtue of their glidepath design, have become more conservatively positioned over time through increased allocations to fixed income. In this white paper, we offer Lifecycle Funds investors an informed perspective on the prospect of rising interest rates and their likely impact.
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June 28, 2013
Riding the cycle: The ups and downs of real estate investing
The course of real estate investing features ups and downs, with certain markets and sectors performing better during varying parts of the cycle. But just like the Tour de France bicycle race, it's performance across the long-term that really matters. In this paper our experts explore this concept, examining the cycle so far and patterns of recovery across primary and secondary markets, performance of certain property markets during distinct phases of the cycle, and offer their assessment of current trends and strategy for winning the real estate investment race.
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May 13, 2013
Cap rates rising: Fear and loathing in real estate
Our experts explore the relationship between interest and cap rates and the overlooked factors that should soothe investor fears.
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May 3, 2013
Finding income and managing risk in a near-zero interest-rate environment
The current low-yield landscape raises important issues for all investors, including where to find adequate income, how to address the risk of rising rates and how to protect against the potential for higher inflation.
Read the white paper now. (PDF)

April 26, 2013
8 reasons why core property investment still makes sense
With the real estate recovery entering its fourth year, is it time to move away from core property investment and toward higher-risk strategies? Not necessarily. In our judgment, current and expected market conditions continue to favor core property investment. Furthermore, the attractiveness of higher-risk strategies is diminished and their risks intensified by some of the same reasons that make core a good bet going forward.
Read the white paper now. (PDF)

February 28, 2013
Winning markets: Persistence in target market portfolio performance
In this whitepaper, Martha Peyton and Edward Pierzak, Global Real Estate Strategy & Research, examine the question Does metropolitan area real estate performance exhibit persistence?
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February 22, 2013
Differences matter in emerging markets
In this white paper, portfolio managers from the emerging markets debt and active emerging markets equity teams examine the differences between various emerging market nations, and the risk factors investors should weigh before making an allocation.
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February 15, 2013
Commercial mortgages are HOT!
In this whitepaper, Martha Peyton, Head of Global Real Estate Strategy & Research, explores the commercial mortgage opportunity and its relationship to U.S. property investment.
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August 28, 2012
Do Low Cap Rate Markets Offer Value? History Says Yes!
In this whitepaper, Martha Peyton, Head of Global Real Estate Strategy & Research, examines historical metro area market pricing.
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August 1, 2012
Shopping: A Whole New Meaning
This paper describes developments in the retail real estate sector and implications for investors.
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June 11, 2012
The Changing Nature of Sovereign Debt
International sovereign debt is a cornerstone of fixed-income investing, offering a range of opportunities for investors seeking yield, total return and diversification benefits. This white paper will explore why sovereign debt matters and highlight both the risks and the opportunities for investors.
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September 29, 2011
Is Commercial Real Estate a Hedge Against Inflation?
Martha Peyton, Head of Global Real Estate Strategy and Research, examines both inflation prospects for the U.S. economy over the next few years and the capacity of commercial real estate to provide inflation protection.
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July 11, 2011
A Role for "Magic" in Assessing Long-Term U.S. Economic Prospects
Martha Peyton, Head of Global Real Estate Strategy and Research, and Brett Hammond, Senior Economist, examine economic prospects through a different lens.
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January 17, 2011
Preparing for a Cycle Upswing in Commercial Real Estate Performance: Fundamentals, Liquidity and Momentum
Martha Peyton, Head of Real Estate Strategy & Research, examines if buy-and-hold investors can benefit from momentum along with more active investors who transact during the next upswing in the commercial real estate market.
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