Nuveen Enhances Target-Date Fund Offering with Direct Real Estate Allocation

Business Wire

Leverages Global Real Estate Expertise to Further Diversify the TIAA-CREF Lifecycle Fund Series

NEW YORK--(BUSINESS WIRE)-- Nuveen, a leading global investment manager, added direct real estate investments as part of the allocation in its award-winning target-date fund series, the TIAA-CREF Lifecycle Funds. This offering, the first in its kind to provide direct access to commercial real estate in target-date mutual funds, is designed to further diversify the portfolios, reduce risk and better position investors to meet their long term investment goals.

TIAA Investments, one of the largest managers of target-date fund assetsin the industry, manages the TIAA-CREF Lifecycle Funds and received the 2017 Lipper Best Mixed Assets Large Fund Group Award for the second year in a row. The real estate investments for the fund series will be made through TH Real Estate which has over 70 years of experience managing real estate investments for institutional investors. TH Real Estate is the third largest commercial real estate investor in the world and the largest real estate investment manager for US tax-exempt assetsaccording to Pensions & Investments.

“The opportunity to include direct real estate as part of our TIAA-CREF Lifecycle Fund series allocation provides us with the ability to further diversify, reduce volatility and potentially improve investment outcomes,” said John Cunniff, managing director at TIAA Investments and portfolio manager of the TIAA-CREF Lifecyle Fund series. “We believe exposure to direct real estate alongside investments in equity and fixed income is central to building a well-diversified, long-term portfolio for investors.”

The real estate allocation of the TIAA-CREF Lifecycle Fund series will typically range between 1 to 5% of each portfolios’ assets employing a core investment style focused on institutional-quality U.S. commercial real estate investments primarily in office, industrial, retail and multi-family residential properties that seek to generate returns primarily from rental income with asset appreciation as a secondary goal. Core real estate assets are well-occupied properties with high-quality tenants with long-term leases often located in high barrier-to-entry markets such as New York, Washington, D.C. and San Francisco.

While real estate allocations have long played an important role in the performance of defined benefit plan portfolios, they have been less accessible to defined contribution plan investors until now.

“More than a decade after regulations spurred the proliferation of target-date funds as the predominant investment vehicle in defined contribution plans, we’re now seeing plan sponsors and plan advisors take a fresh look at their plans’ investment menus,” said Erin Donnelly, executive vice president and head of Defined Contribution Investment Only (DCIO) at Nuveen. “With nearly 100 years of experience managing retirement assets, we’re thrilled to continue that legacy by leveraging the expertise of our specialized investment teams to deliver a target-date fund enhancement that allows plan participants to benefit from the unique investment advantages that direct real estate has to offer.”

In a recent analysis, Nuveen found that:

Incorporating direct real estate investments into target-date funds provided the potential to enhance diversification, reduce volatility, and improve investment outcomes.
Lower correlations with major asset classes have made direct real estate a unique diversifier for stocks and bonds, with greater potential to reduce risk than real estate investment trusts (REITs)—publicly-traded equity securities more correlated with stocks.
Direct real estate provided higher risk-adjusted performance than stocks, bonds, and REITs over the past 20 years.
A 5% allocation to direct real estate improved risk-adjusted returns and retirement accumulations in most scenarios, while also reducing risk.

The findings are available for download by institutional investors and financial advisors in a new whitepaper entitled, Target-Date Funds: Improving Diversification with Direct Real Estate.

About Nuveen

Nuveen offers a comprehensive range of outcome-focused investment solutions designed to secure the long-term financial goals of institutional and individual investors. As the investment management arm of TIAA, Nuveen has $882 billion in assets under management as of 12/31/16 and operations in 16 countries. Its affiliates offer deep expertise across a comprehensive range of traditional and alternative investments through a wide array of vehicles and customized strategies. For more information, please visit www.nuveen.com.

About TIAA Investments

TIAA Investments, an affiliate of Nuveen, offers a broad selection of traditional and alternative investment solutions for institutional and individual investors, encompassing private capital, active equity and fixed income, index, ESG and multi-asset strategies.

About TH Real Estate

TH Real Estate, an investment affiliate of Nuveen (the investment management arm of TIAA), is one of the largest real estate investment managers in the world with $97bn in AUM (as of December 31, 2016). Managing a suite of nearly 80 funds and mandates spanning both debt and equity across diverse geographies, sectors, investment styles and vehicle types, the firm provides access to every aspect of real estate investing. With offices in 20 cities throughout the US, Europe and Asia Pacific, over 500 professionals and 70 years of investing experience, the platform offers deep local expertise coupled with a sophisticated global perspective. For more information, please visit www.threalestate.com

The TIAA-CREF Lifecycle funds are advised by Teachers Advisors, LLC, an affiliate of Nuveen. The TIAA-CREF family of mutual funds won the 2017 Lipper Mixed-Assets Large Fund Award. The Lipper Mixed-Assets Large Fund 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 11/30/15 (against 39 fund families) and 11/30/16 (36). Note this award pertains to mixed-assets mutual funds within the TIAA-CREF group of mutual funds; other funds distributed by Nuveen Securities were not included. From Thomson Reuters Lipper Awards, © 2017 Thomson Reuters. All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution, or retransmission of this Content without express written permission is prohibited. Certain funds have fee waivers in effect. Without such waivers ratings could be lower. Past performance does not guarantee future results. For current performance, rankings and prospectuses, please visit the Research and Performance section on TIAA.org.

Nuveen conducted a survey of US target-date mutual funds as described in publicly available prospectuses. Note that some target-date collective investment trusts include an allocation to direct held commercial real estate.

Largest Real Estate Investment Manager of US Tax-Exempt Assets and #3 Largest Real Estate Investment Manager Worldwide, 2016 Pensions & Investments Ranking.

Diversification is a technique to help reduce risk. There is no guarantee that diversification will protect against a loss of income.

Please note, the target date for TIAA-CREF 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.

Target-date mutual funds share the risks associated with the types of securities held by each of the underlying funds in which they invest. As with all mutual funds, the principal value isn’t guaranteed. Also, please note that the target date is an approximate date when investors may begin withdrawing from the fund. Real estate investments are subject to various risks, including fluctuations in property values, higher expenses or lower income than expected, and potential environmental problems and liability.

Nuveen Securities, LLC, Members FINRA and SIPC, distribute securities products.

You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161 or log on to www.tiaa.org for product and fund prospectuses that contain this and other information. Please read the prospectuses carefully before investing.

This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy or sell securities, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor's objectives and circumstances and in consultation with his or her advisors.

Nuveen LLC, formerly known as TIAA Global Asset Management, provides investment services through TIAA and its registered investment advisers.

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