TIAA-CREF to Offer 5 Funds for Cost-Conscious Investors

Teachers Insurance & Annuity Assn.-College Retirement Equities Fund, or TIAA-CREF, the company spawned from U.S. industrialist Andrew Carnegie’s aim to ensure professors a snug retirement, is rolling out five new mutual funds, seeking to attract cost-conscious investors to build its 2-year-old fund business.

The 82-year-old New York-based company plans to introduce in April a municipal bond fund, a short-term bond fund, a high-yield bond fund, a “socially conscious” fund and a fund that tracks the broad-market Russell 3,000 index.

“If you’re looking for some of the more sexy, exotic Internet plays, we’re probably not the place that you’d want to consider,” said Dennis Foley, head of business operations for the funds. TIAA-CREF is the world’s biggest pension-fund company, managing about $291 billion.

As with the six funds TIAA-CREF has offered to the public since February 1998, the new offerings will have relatively low fees and a minimum investment requirement of $250. No-load funds typically require a minimum investment of $2,500 to $3,000, according to fund tracker Morningstar Inc.

The combination of low fees and low minimums helped TIAA-CREF’s funds cross the $2-billion asset mark Dec. 31.

Foley said the equity funds are also counting on a novel investment approach to keep returns steady and set them apart from competition: If TIAA-CREF’s stock pickers can’t find investments that meet their criteria, they can allocate a larger portion to the index that constitutes their fund’s benchmark.

“I think TIAA is a little ahead of the curve on that,” said Russ Kinnel, a Morningstar senior analyst.