TIAA Funds Get Big Boost from Nuveen Distribution
The firm is among the year’s biggest gainers on the latest iteration of the II300.
TIAA rises one rung to No. 14 on the II300, Institutional Investor’s annual ranking of the U.S.’s top money managers. It also lands in ninth place on this year’s list of biggest gainers, having picked up $16.9 billion in 2015, bringing its assets under management total to $854.3 billion.
That’s a feat that Robert Leary, CEO of TIAA Global Asset Management since 2013, pins largely on the appeal of its actively managed mutual funds and alternative investments such as timber and agriculture. The New York–based firm provides a broad range of investments, including active and passive target-date retirement funds, equity, fixed income, private debt, real estate and other alternative assets.
“TIAA Global Asset Management is the best-kept secret,” he says. “That will change and deserves to change given our performance.”
Last year Chicago-based Nuveen Investments, which TIAA acquired in 2014, started distributing TIAA’s mutual funds. Although nearly 70 percent of TIAA’s $87.7 billion in mutual funds have four- and five-star ratings from Morningstar, on an asset-weighted basis, the firm had only a small team to market them outside its own retirement system. It has since introduced a new fund share class for advisers, and the firm has gained significant assets, including in its international equity fund, from wirehouses, broker-dealers and registered investment advisers. TIAA realized $8.3 billion in mutual fund net flows in 2015, a 6 percent organic growth rate, Leary reports.
Nuveen is also helping TIAA reach high-net-worth investors and distribute institutional products. Through Nuveen’s European fund platform, TIAA is marketing its $17 billion Social Choice securities, one of the largest socially responsible lineups, outside the U.S. for the first time.
The growth of alternative investments also helps push TIAA up the roster, he notes. “The popularity of alternatives in the industry overall is not showing up in AUM growth so much, but it is reshaping the revenue and margin picture for asset managers,” Leary explains. TIAA had $4.2 billion of net flows into real-asset strategies in 2015, including $3 billion in global agriculture and $667 million in global timber.
The firm was founded in 1918 as the Teachers Insurance and Annuity Association of America by steel magnate Andrew Carnegie to provide retirement services to educators.