The simplicity of an all-in-one solution such as a lifecycle fund is extremely appealing to retirement savers. It likely comes as no surprise that use of these products has spread far and wide, especially among younger investors. But not all lifecycle funds are created equal. Many who choose them fail to consider the effect that differences in fund design can have on retirement readiness. With your guidance, clients can see the following benefits, which come from working with an experienced investment manager that provides active and index options designed to maximize growth and income through today’s longer retirements..
Get the story behind the stars.
Returns tell only part of a performance story. It’s equally important to look at how much risk a manager “spends” to achieve those returns. That’s why Morningstar takes risk into account when assigning their coveted star ratings. And we’re happy to report that the TIAA Lifecycle Funds have earned high marks, (As of 6/30/15 5 stars - 86%, 4 stars - 14%) as shown above.2
It’s important for investors to note how much they will spend on fees, especially for a fund of funds. Simply put, the lower the fees, the more money is left to work toward your clients’ goals. TIAA’s commitment to keeping costs low is a natural extension of our heritage of doing what’s right for those entrusting us with their retirements. Our Lifecycle Funds have some of the lowest expenses in the industry.
See why our glidepath may work better for clients.
The TIAA glidepath factors in market history and considers the future, using historical returns from various market environments to devise a glidepath we have confidence in for the future.
Additionally, the glidepath is weighted more heavily than most toward equities in the years leading up to and during retirement. This accounts for today’s retirements, which may last 30 years or more, by seeking a balance between the need for current income and continued growth.
Our Lifecycle Funds benefit from the deep resources and risk/reward expertise of the funds’ managers, as well as those who run the underlying investments. When it comes to risk, we look beyond diversifying across asset class in three important ways.Discover the three additional ways we work to manage risk.
Target-Date Funds: The retirement glidepath debate
Find out which target-date funds glidepath may increase retirement savings and the likelihood of maintaining income throughout retirement.
Lifecycle Funds Brochure
The brochure helps you present the funds’ distinctive combination of benefits to clients.
Forward Thinking Lifecycle Funds (PDF)
Lifecycle Funds Methodology and Design
Our comprehensive paper takes a detailed look at how we’ve designed our Lifecycle Funds.
Lifecycle Methodology and Design (PDF)
Lifecycle Funds At A Glance
This piece provides a quick overview of how TIAA-CREF’s time-tested approach to investing is reflected in our Lifecycle Funds.
At a Glance Lifecycle Funds (PDF)
Overview of fixed income allocation enhancements
On October 1, 2015, TIAA-CREF implemented enhancements to the strategic fixed-income allocation targets within its Lifecycle Index Funds.
Lifecycle Index Allocation Enhancements Overview (PDF)
1 TIAA-CREF wins the "Best Overall Fund Company" award in 2013, 2014 and 2015. The Lipper Award is given to the group with the lowest average decile ranking of three years' Consistent Return for eligible funds over the three-year period ended 11/20/12, 11/30/13, and 11/30/14 respectively. TIAA-CREF was ranked among 36 fund companies in 2012 and 48 fund companies in 2013 and 2014 with at least five equity, five bond, or three mixed-asset portfolios. Past performance does not guarantee future results.
2 Morningstar ratings based on the lowest cost share class (Institutional Share Class) for each mutual fund, based on U.S. open end mutual funds. For a fund with multiple share classes and the same pricing, the share class with the longest performance history is used. Morningstar ratings may be higher or lower on a monthly basis. Morningstar is an independent service that rates mutual funds. The top 10% of funds 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 fund’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 fund 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 June 30, 2015. Past performance cannot guarantee future results. For current performance and rankings, please visit www.tiaa-cref.org/public/tcfpi/InvestResearch.
3 Applies to mutual fund expense ratios. Source: Morningstar Direct, June 30, 2015. We analyzed each lifecycle fund against its respective Morningstar category to determine percentile ranking for expenses. The highest 1% of funds’ expense ratios have been excluded as outliers
Please note Lifecycle Funds are subject to the equity and fixed income risk, as well as asset allocation risk. 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. TIAA-CREF has 24 Lifecycle Funds (12 actively managed funds and 12 index funds). The Morningstar category for Lifecycle Funds is named Target Date and Morningstar groups funds within the same target date in compiling its individual fund rankings.
Portfolios are subject to certain risks such as market and investment style risk. Please consider all risks carefully before investing. Target-date mutual funds share the risks associated with the types of securities held by each of the underlying funds in which they invest. Diversification is a technique to help reduce risk. There is no guarantee that diversification will protect against a loss of income.
TIAA-CREF Individual & Institutional Services, LLC, Teachers Personal Investors Services, Inc., and Nuveen Securities, LLC, Members FINRA and SIPC, distribute securities products.