TIAA-CREF has won its fight to merge 11 of its retail mutual funds. The New York City-based fund firm was pushing the move as part of an effort to control relative costs in the funds. By combining the offerings, the funds will have larger asset bases across which TIAA-CREF can spread its costs. The fund firm first proposed the mergers in April 2006.
The mergers could save the fund complex as much as $100 million, according to the Wall Street Journal's Fund Track column
TIAA-CREF executives have been focused on controlling costs as part of its battle to build marketshare outside of its longtime redoubt in the 403(b) retirement plan market where it is the market leader in the college and university market. Under CEO Herbert Allison, a former Merrill Lynch executive, the firm made a push into both the 529 college savings plan market and the advisor distribution channel.
Yet, even with its substantial asset base TIAA-CREF has run into challenges competing with Vanguard to win over state 529 plans, and it has lost clients including Missouri's 529 last year and the California 529. Most recently, the University of Minnesota, which saw its plan hit with recordkeeping glitches that are reportedly being looked into by the DoL's EBSA arm. It could also be losing a 529 client as Tennessee and Georgia are reportedly in discussions to merge their programs (though, the merged plans would likely be a boon to TIAA-CREF due to the increase in scale).
On the positive side of the ledger, TIAA-CREF just signed on the Michigan 529 plan.
While its strong presence in the higher-ed market has contributed to TIAA-CREF's stability and provided resources, including a loyal shareholder following that other fund firms may envy, that success comes with some baggage. Foremost may be what could be characterized as a "quirky" shareholder base. Among those fighting the fund mergers, and past fee increases sought by the complex, are academics who focus like a laser on fees and who have the research abilities to measure their cost down to the basis point. In this vote, though, TIAA-CREF won the field with more than 80 percent of the vote.
[Company Press Release Follows]
TIAA-CREF Mutual Fund Shareholders Approve Merger
NEW YORK, April 3 -- TIAA-CREF, the financial services organization and leading provider of financial services in the academic, medical, and cultural fields today announced that at a special meeting shareholders of the following TIAA-CREF Mutual Funds (the "Retail Funds") approved the merger of their Funds into corresponding Funds of another TIAA- CREF Fund family, the TIAA-CREF Institutional Mutual Funds (the "TIAA-CREF Funds"), with substantially similar investment objectives and principal investment strategies. More than 80% of the shareholders who voted approved the merger proposal.
|This Retail Fund||will merge into||This TIAA-CREF Fund|
|International Equity Fund (TIINX)||-->||Institutional International Equity Fund (TIERX)|
|Growth Equity Fund (TIGEX)||-->||Institutional Large-Cap Growth Fund (TIRTX)|
|Growth & Income Fund (TIGIX)||-->||Institutional Growth & Income Fund (TIIRX)|
|Equity Index Fund (TCEIX)||-->||Institutional Equity Index Fund (TINRX)|
|Social Choice Equity Fund (TCSCX)||-->||Institutional Social Choice Equity Fund (TICRX)|
|Managed Allocation Fund (TIMAX)||-->||Institutional Managed Allocation Fund II (TIMRX)|
|Bond Plus Fund (TIPBX)||-->||Institutional Bond Plus Fund II (TCBPX)|
|Short-Term Bond Fund (TCSTX)||-->||Institutional Short-Term Bond Fund II (TCTRX)|
|High-Yield Bond Fund (TCHYX)||-->||Institutional High-Yield Fund II (TIYRX)|
|Tax-Exempt Bond Fund (TCTEX)||-->||Institutional Tax-Exempt Bond Fund II (TIXRX)|
|Money Market Fund (TIAXX)||-->||Institutional Money Market Fund (TIRXX)|
The purpose of merging the Funds is to create a single, streamlined TIAA- CREF Fund family designed to help meet shareholders' investment needs while keeping overall Fund expenses competitive with those of other low-cost providers. The effective date of the merger is expected to be April 20, 2007. After 4:00 p.m. Eastern Time on that date, any shareholder transactions initiated in a former Retail Fund(s) will occur in the corresponding TIAA-CREF Fund(s).
TIAA-CREF is a national financial services organization with more than $406 billion in combined assets under management (12/31/06) and is the leading provider of retirement services in the academic, medical and cultural fields. Further information can be found at www.tiaa-cref.org.
TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., distribute securities products.
You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call log on to www.tiaa-cref.org for a prospectus that contains this and other information. Please read the prospectus carefully before investing.
Web site: http://www.tiaa-cref.org/
Stay ahead of the news ... Sign up for our email alerts now