TIAA-CREF is enhancing the asset allocation of its lifecycle funds to give investors better returns.

Kamal Bhatia, head of asset management product development at TIAA-CREF elaborated to the MFWire on the reasoning behind the development, "the enhancement comes in response to an updated investment allocation thinking process".

The main benefits for the individual investor as a result of the enhancement are "pure exposure to asset classes and access to the best asset allocation thinking around," Bhatia adds.

The augmentations adjust the initial asset allocation and the investment allocation "glide path," (the manner in which the lifecycle fund will slowly be reallocated over time), across all target retirement dates and are effective immediately, explained Carol Deckbar, managing director of mutual fund products at TIAA-CREF.

Deckbar added that, "the lifecycle funds are based on our research-driven, disciplined investment approach, drawing upon the resources of our experienced asset management team, to stay fully invested while maintaining the most attractive risk versus return characteristics."

All seven TIAA-CREF lifecycle funds now feature increased equity allocations of 90 percent at the outset of the glide path. In addition, the glide path now extends beyond the retirement date, increasing exposure to equities at the time of retirement from 35 percent to 50 percent and will decrease to 40 percent ten years beyond the retirement date.

Padelford Lattimer, senior managing director of product management, says of the changes: "These enhancements to our lifecycle funds are reflective of our nearly 90 years of experience and long-term view in designing investment allocation plans that best position our investors to get to and through retirement."

The strategy enhancements will take place gradually based on the funds' net flows and general market conditions.  

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