TIAA-CREF broadened its portfolio of lifestyle funds this week with several new investments that automatically reallocate their portfolio assets to coincide with retirement plan participants projected retirement dates.
"We are launching these new TIAA-CREF Lifecycle Funds in response to our participants desire for a high-value, easy-to-use, less time-consuming investment option for people in making specific long-term investment decisions," said Edward Van Dolsen, vice president of pension product management.
Lifestyle funds, which simplify the demands of navigating lists of retirement plan investment alternatives, have become controversial products for the pension industry. Retirement plan providers are torn between demand for greater flexibility in investment selection and criticism for failing to protect participants from making poor decisions.
Investors may select of TIAA-CREFs seven new lifestyle funds that coincide with their retirement plans. The funds utilize "inflation-linked" bonds as a hedge against inflation and mechanically shift to toward more conservative investment allocations, i.e. fewer equity holdings, as the investors retirement date draws closer.
The new lifestyle funds are funds-of-funds that invest in the firms existing proprietary mutual funds. Maturity dates will begin in 2010 and increase at five-year intervals.