Creating and maintaining a diversified portfolio
When constructing a professionally managed portfolio, TIAA takes into account your long-term goals and is mindful of the risks you are willing to take. But how do we establish and maintain your asset allocation strategy in a way that helps ensure your portfolio risk remains in line with your investment objectives and goals, as well as the evolving financial markets?
It starts with Capital Market Assumptions
Capital Market Assumptions (CMAs) represent estimates of the risk and return of each asset class, as well as how the asset classes perform relative to each other. Comparisons are composed of a wide range of assets that include equities (ex: large-cap stocks), fixed income (ex: short-term bonds) and alternative assets (ex: managed futures). TIAA’s Investment Management Group incorporates CMAs into formulating asset allocation to reach a desired balance between risk and return. We also use CMAs to project the range of possible
outcomes an asset allocation may produce over the next 10, 20 or 20+ years—so how the CMAs are determined is critical. TIAA’s CMAs are based on both historical data and a forwardlooking economic view.
outcomes an asset allocation may produce over the next 10, 20 or 20+ years—so how the CMAs are determined is critical. TIAA’s CMAs are based on both historical data and a forwardlooking economic view.
Periodically, this information is used to evaluate your current asset allocation strategy and adjust it accordingly to maintain a properly diversified portfolio. Since asset allocations are one of the most significant drivers of variability in portfolio performance, think of CMAs as essential building blocks that help determine which asset classes are included in your portfolio.