TIAA Real Estate and asset allocation -- REIT? Bond?

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steve r
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TIAA Real Estate and asset allocation -- REIT? Bond?

Post by steve r »

Image

I found this chart interesting. It compares TIAA Real Estate Account (TREA) with a REIT index and a investment grade bond fund. (Total Bond fund looked somewhat similar). So I thought I would start another thread ...

Some points
* TREA lacks REIT lock volatility.
* TREA has a relatively high expense ratio -- but these are direct management feeds (a REIT index fund has expenses and buys REITs that has expenses, so I am not sure how to do such a comparison).
* About 1/5 cash (currently)

I own it, but wonder if I should consider this an "equity" or "bond" in my AA (or perhaps simply split the difference as a precise AA is not overly meaningful)?
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by stlrick »

About 10% of my 403(b) is in TIAA Real Estate. I consider it a unique investment class and ignore it when looking at my equity/bond ratio. Actually, I don't really have an equity/bond ratio, because most of my bond accumulation is in TIAA Traditional, their version of a stable value fund. If you owned a rental property, how would you factor it into your equity/bond allocation? That's how I think of TIAA Real Estate.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by The Wizard »

We talk about this a lot in the M* T-C forum.
Some folks have 30%-50% of their portfolio in TREA; some even have more.
Most of us agree that it's a separate asset class with features of both bonds and equities.
This is because TREA's NAV is the sum of rental income received plus changes in appraised value of direct holdings...
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by livesoft »

It's a fund that lives in the past. Even my Grandmother could market time this baby and you should too.

Here's the bogleheads' thread on this one:
http://www.bogleheads.org/forum/viewtop ... st=1898039

The problem with the M* T-C forum is that folks are infatuated and do not treat this fund with dispassion.

And what is it? I treat it as neither fixed income nor equity. One can lose as much in it as in equities and gain no more than in a fixed income fund. Your chart shows that the fund has not reached its high from 6-7 years ago.

I own it (~9% of total portfolio), but only because The Wizard convinced me to keep it a few more months.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Browser »

I once ran correlations between TREA returns with stocks and bonds and found about an equal correlation to each. One problem with doing that is the low volatility of TREA which dampens the correlation coefficients. I treat it as a "real estate" asset class - surprise. If you look at the returns, they kinda look like highly smoothed, lagged REIT returns. You can't ignore the big hit that TREA took in 2008 along with stocks - as did REITS. It can act a lot more like stocks than bonds in a bear market.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by manwithnoname »

TREA is dog meat compared to VG REIT (cumulative appreciation of only 50% of VG REIT) because the assets consist of RE owed by the fund which are valued by an opaque process every three months that is based on subjective appraisal of the RE whereas the REITs are publically traded and valued daily. Only reason to invest in the TREA is that investor has no option to invest in VG REITs. Also the fee for TREA is about .90% compared to VG REIT fees of .10% to. 24%.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by steve r »

manwithnoname wrote: Also the fee for TREA is about .90% compared to VG REIT fees of .10% to. 24%.
The fee comparison is garbage ... SPG (Simon Property Group) has additional expenses not included in the 0.10?

Also, the Sharpe ratio suggests a much higher return on a risk adjusted basis for TIAA Real Estate

I own both.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Garco »

Disagree with Manwithnoname. I have option to invest in REITS and TREA and only invest in TREA. Its low correlation with stocks and REITS is a feature, not a bug. The system of quarterly appraisals of TREA properties is less opaque and scary to me than the machinations of "dark pools" and off-exchange trading in equities, not to mention problems of front-running and other tricks of speed-trading.

I agree with Wizard that the consensus of TREA owners is that it is a separate class. It is like equity in the fundamental sense that TREA owners, like share holders of equities, directly own a small piece of the underlying company's value and net income. But it is not nearly as volatile as equities. I own it in part for the sake of inflation protection. As for "timing" it, TIAA has in place some restrictions that make trading in/out difficult to do. It is easier to get out of TREA than to get back in in a short-time.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Browser »

manwithnoname wrote:TREA is dog meat compared to VG REIT (cumulative appreciation of only 50% of VG REIT) because the assets consist of RE owed by the fund which are valued by an opaque process every three months that is based on subjective appraisal of the RE whereas the REITs are publically traded and valued daily. Only reason to invest in the TREA is that investor has no option to invest in VG REITs. Also the fee for TREA is about .90% compared to VG REIT fees of .10% to. 24%.
Well, not really. Over the last 3 years, for example, the compound growth of TREA has been 36.4% and the compound growth of VGSIX has been 30.4%. TREA is considerably less volatile than VGSIX as well, so that the risk-adjusted return is much higher. To paraphrase the poster, the only reason to invest in VG REIT is that the investor has no option to invest in TREA. :happy
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by ResearchMed »

Garco wrote:Disagree with Manwithnoname. I have option to invest in REITS and TREA and only invest in TREA. Its low correlation with stocks and REITS is a feature, not a bug. The system of quarterly appraisals of TREA properties is less opaque and scary to me than the machinations of "dark pools" and off-exchange trading in equities, not to mention problems of front-running and other tricks of speed-trading.

I agree with Wizard that the consensus of TREA owners is that it is a separate class. It is like equity in the fundamental sense that TREA owners, like share holders of equities, directly own a small piece of the underlying company's value and net income. But it is not nearly as volatile as equities. I own in in part for the sake of inflation protection. As for "timing" it, TIAA has in place some restrictions that make trading in/out difficult to do. It is easier to get out of TREA than to get back in in a short-time.
Agree with much that Garco says.
We, too, own TREA, quite a lot in fact. It is our "bond equiv", and like livesoft's Grandmother, Granny here (me) timed TREA in 2008-2010.

However, to clarify what Garco wrote, TIAA-CREF has new rules about selling TREA that might not make timing so easy, except perhaps for the very first early birds.
There is, last I looked, still the "once per quarter" restriction on selling.
But there is a NEW restriction in that TIAA-CREF reserves the right to stop any selling if they see fit, which, presumably, they would should there be another 2008 type of situation.

And getting back in, there is now a $150k (I think that's the limit) per (person? account? SSN?).
Once in, the amount can grow without restriction, at least at this time.

RM
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by raywax »

[quote="ResearchMed"][quote="Garco"
But there is a NEW restriction in that TIAA-CREF reserves the right to stop any selling if they see fit, which, presumably, they would should there be another 2008 type of situation.

The once per quarter sale rule has been in place for as long as I have been invested in it and that is more than a decade. So has the provision that allows them to stop selling but they did not in 2008 and will not if there is another major downtown in CRE. TIAA itself will provide the liquidity as they did in the recent (2008+) downturn.

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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Garco »

As ResearchMed wrote....

There has long been (maybe always since TREA's inception in 1995?) a restriction on sales (withdrawal of money) from TREA to once per calendar quarter. You could take all your money out with a single phone call. You could take half of it out on March 31, and half out on April 1 (different calendar quarters).

You put money into TREA basically by transferring money from one TIAA-CREF fund to another, e.g., from CREF Stock to TREA, or by "systematic transfers" which for most people take the form of regular contributions from salary (by the individual and the employer). However, "systematic transfers" can take other forms, including an agreement by the member with TIAA to make a (usually short) series of transfers on a prescheduled basis (say over 3 months) from another fund or account.

Beginning in May 2011, TIAA also put into place a permeable barrier of $150K. Individuals whose TREA holding is $150K+ across all types of account they may hold with TIAA (403b RA or SRA, IRA, 457b, etc.) can only transfer money into TREA via systematic transfers (including contributions from salary, as I have described above). So if they take a significant amount of money out of TREA, it could take some time to get that money back into TREA if their total holding is $150K or more. Thus, TIAA has sought to slow down but not to prevent people from "trading" TREA for short-term gain or loss-minimization. But lots of people, including me, have more than $150K in TREA.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by manwithnoname »

steve r wrote:
manwithnoname wrote: Also the fee for TREA is about .90% compared to VG REIT fees of .10% to. 24%.
The fee comparison is garbage ... SPG (Simon Property Group) has additional expenses not included in the 0.10?

Also, the Sharpe ratio suggests a much higher return on a risk adjusted basis for TIAA Real Estate

I own both.
I could not care less about Simon properties. I was comparing VG Reit fees with TREA. Don't know why an investor would pay 3X to 9X the fee of a VG fund to invest in a mediocre RE fund where the assets are subject to a opaque valuation process that is not publically disclosed and are illiquid because they are locked up under weird rules.

Higher risk adjusted basis means bupkis if the returns are below average over the long run, as the TREA has consistently underperformed since inception. Only infallible rule of investing is buy low, sell higher. I don't understand how investors can delude themselves into believing that consistent under performance of an asset over almost 20 years is due to taking greater risks. If the asset is an underperformer, it doesn't matter what the reason is.

If you like TREA knock yourself out but I would not touch it.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by manwithnoname »

raywax wrote:
ResearchMed wrote:[quote="Garco"
But there is a NEW restriction in that TIAA-CREF reserves the right to stop any selling if they see fit, which, presumably, they would should there be another 2008 type of situation.

The once per quarter sale rule has been in place for as long as I have been invested in it and that is more than a decade. So has the provision that allows them to stop selling but they did not in 2008 and will not if there is another major downtown in CRE. TIAA itself will provide the liquidity as they did in the recent (2008+) downturn.

Ray
But who pays for the put option? Is TIAA providing the liquidity to TREA for free.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by steve r »

manwithnoname wrote: I could not care less about Simon properties.
So you do not care about the expenses of a ten percent holding? There fees are not reported in the expense ratio of VNQ. If you wanted an expense ratio of zero, just buy SPG. Why pay infinite times the expense with VNQ.


I get, but disagree with your lack of concern of risk adjusted returns. The chart shows one clearly outperforms the other on an absolute basis by a factor of 2 in nearly twenty years.

A back of the envelope calculation is that TREA is about the same as 50/50 VNQ/Cash in terms of return, though VNQ/Cash is more volatile with an equivalent return. By this analysis, TREA is strictly better ... but you are not maximizing your investments. Phrased differently, VNQ is like TREA with leverage (which is not an option(,
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Valuethinker »

manwithnoname wrote:
I could not care less about Simon properties. I was comparing VG Reit fees with TREA.
But it is relevant. Do you not understand that? Because you are not comparing like for like, if you do not include the costs of managing the REITs that the Vanguard fund holds. In effect, TIAA RE is *one REIT*.
Higher risk adjusted basis means bupkis if the returns are below average over the long run, as the TREA has consistently underperformed since inception.
Actually a chart against the relevant benchmark would be handy -- return chart against US commercial real estate index. It' is not clear to me TIAA RE has underperformed its benchmark.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Valuethinker »

steve r wrote:
I get, but disagree with your lack of concern of risk adjusted returns. The chart shows one clearly outperforms the other on an absolute basis by a factor of 2 in nearly twenty years.
,
The point is the Vanguard REIT fund has higher leverage (how much higher I don't know, I read somewhere the average REIT is 50% levered?). In a bull market, higher leverage is going to give you higher returns. That's not alpha at work though (unless you think the managers are particularly skilled at changing the leverage, and by definition in an index fund that is the leverage of the REITs themselves).

Given the discounts REITs were trading on in the early 90s, to NAV, it is not terribly surprising they did so well.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by abuss368 »

Am I seeing the graph right? After 10 years the REIT Index Fund has double the return at $60K?
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by MN Finance »

Tiaa holders "pay" for the put option. At 10-20 times the size and an infinite time horizon, it's a non issue. Tiaa itself holds more real estate than the RE fund and with 60 years of experience, I'm sure they have no problem absorbing the risk.

We allocate a separate RE allocation in our AA. Ie, if I was a 50/50 investor, to me that means 45 stock and 7 RE. Of the RE 5 is TIAA and 2is reit.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Valuethinker »

abuss368 wrote:Am I seeing the graph right? After 10 years the REIT Index Fund has double the return at $60K?
But note the position in late 2008-- you were actually worse off in REIT index fund. That's leverage at work.

Quoted REITs have on average more leverage than the TIAA RE fund. The latter 30% (up to) the former I have heard a number of 50% (but it could be a lot higher).

Run back to 1995. Commercial RE had come out of the crash in 1990, was lowly valued, 7-8% yields, discounts to NAV of 20-40% (from memory). And then you have a bull market in CRE which didn't break to 2008. If you are leveraged in a bull market, you will make a lot of money. And the whole valuation basis of REITs shifted radically-- at some points, trading at a premium to NAV, yields falling below 4%.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by manwithnoname »

MN Finance wrote:Tiaa holders "pay" for the put option. At 10-20 times the size and an infinite time horizon, it's a non issue. Tiaa itself holds more real estate than the RE fund and with 60 years of experience, I'm sure they have no problem absorbing the risk.

We allocate a separate RE allocation in our AA. Ie, if I was a 50/50 investor, to me that means 45 stock and 7 RE. Of the RE 5 is TIAA and 2is reit.
I don't see why participants who have TIAA fixed annuities should not be getting a reasonable rate of return for loaning out TIAA funds to the RE fund since these loans reduce the amount of investable assets which would generate higher income in the TIAA fixed annuity. Its just another example of how Mother TIAA is subsidizing the disappointing RE investments of TREA which is a separate account, not part of TIAA.
As a comparison CREF reimburses TIAA for the cost of TIAA operations and personnel who service CREF investments. TREA is just a money losing vampire squid.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Garco »

manwithnoname: I have no idea what you're talking about in that last paragraph. The fact that TREA is a distinct investment vehicle from the TIAA general account doesn't mean either one is leaching off the other, or being a "vampire squid," whatever the heck that glittering image means. Several of your earlier comments have been refuted by me or others.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by MN Finance »

manwithnoname wrote:
MN Finance wrote:Tiaa holders "pay" for the put option. At 10-20 times the size and an infinite time horizon, it's a non issue. Tiaa itself holds more real estate than the RE fund and with 60 years of experience, I'm sure they have no problem absorbing the risk.

We allocate a separate RE allocation in our AA. Ie, if I was a 50/50 investor, to me that means 45 stock and 7 RE. Of the RE 5 is TIAA and 2is reit.
I don't see why participants who have TIAA fixed annuities should not be getting a reasonable rate of return for loaning out TIAA funds to the RE fund since these loans reduce the amount of investable assets which would generate higher income in the TIAA fixed annuity. Its just another example of how Mother TIAA is subsidizing the disappointing RE investments of TREA which is a separate account, not part of TIAA.
As a comparison CREF reimburses TIAA for the cost of TIAA operations and personnel who service CREF investments. TREA is just a money losing vampire squid.
I don't understand your point. There's no loan involved. TIAA buys shares and owns the RE position. At a later date RE fund will buy them back when matching fund flows. It effectively fractionally increases the existing RE position already in TIAA, though owned indirectly instead of directly. There isn't a long history but if anything this is a substantial win on both sides. TIAA provides liquidity when there is too much exiting the fund so they don't have to sell assets, and the TIAA holders get a small increase in RE at exactly the best time (when the market is panicked). As long as investors are irrational (not likely to change) this will always be in TIAAs favor.

I don't understand the colorful description of the RE fund. Statistically it has the best risk adjusted return of any fund in the market place. If you plug the data into modeling software it is always far beyond the efficient frontier boundary. I understand the idea of risk adjusted return is either unimportant to you or too complex because in nearly every post I've ever seen you solely focus on absolute return. But for most of us it's an important concept.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by beardsworth »

manwithnoname wrote:TREA is just a money losing vampire squid.
Garco (to manwithnoname) wrote:I have no idea what you're talking about in that last paragraph. The fact that TREA is a distinct investment vehicle from the TIAA general account doesn't mean either one is leaching off the other, or being a "vampire squid," whatever the heck that glittering image means. Several of your earlier comments have been refuted by me or others.
MN Finance (to manwithnoname) wrote:I don't understand the colorful description of the RE fund.
The "vampire squid" reference comes from a now-famous Rolling Stone article by writer Matt Taibbi, describing Goldman Sachs' role in the financial crisis and other workings of Wall Street. Those interested in reading it (I don't want to distract this thread further by posting a link) can Google for "Taibbi" and "vampire squid."

As a way of describing the TIAA Real Estate Account, or as a way of lumping TIAA-CREF with the practices of entities like Goldman Sachs, I consider the user's phrase-borrowing here to be markedly inapt. But for those who are confused, that's where "vampire squid" assumed separate life as a financial rather than a biology description.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by steve r »

beardsworth wrote:
manwithnoname wrote:TREA is just a money losing vampire squid.
I consider the user's phrase-borrowing here to be markedly inapt.
+1
It all makes no sense.
manwithnoname wrote:... just another example of how Mother TIAA is subsidizing the disappointing RE investments of TREA which is a separate account, not part of TIAA. As a comparison CREF reimburses TIAA for the cost of TIAA operations
If "Mother TIAA" / CREF is subsidizing TREA ... as is being suggested ... it would suggest the exact opposite. Shouldn't I want to invest in a fund being subsidized, other things equal?
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Valuethinker »

MN Finance wrote:
I don't understand the colorful description of the RE fund. Statistically it has the best risk adjusted return of any fund in the market place. If you plug the data into modeling software it is always far beyond the efficient frontier boundary. I understand the idea of risk adjusted return is either unimportant to you or too complex because in nearly every post I've ever seen you solely focus on absolute return. But for most of us it's an important concept.
I think we have to accept our interlocutor has a particular ideological bias which is applied to this fund. Hence the completely irrelevant comparison of management fees-- doesn't even seem to understand the issue.

Just on the low correlation. It's widely understood by professional institutional asset allocators that the low correlation between RE assets and the stock market is partially an artefact of the data. To be precise, the data on CRE is backward looking (valuations based on historic transactions) and stock market is forward looking (marked to market daily). As a result, there's a higher correlation if the stock market data is lagged (or the CRE data moved forward).

The ability of individual investors to 'time' TREA, which happened in 2008-09, is a flaw in the fund--institutional investors, being Limited Partners with typically 10 year commitments, would not be able to do that (which got some of them in trouble in the liquidity crunch). That ability to 'time' allowed a transfer of performance to the exiting investors, at the cost of a loss of performance to the remaining investors (in effect the reported NAV was too high, so the exiters were given too much money for their units).

Measures of Sharp Ratio are probably suspect for similar reasons (I'd have to think about that)-- the volatility is 'damped' artificially.

That said, we can assert some useful things about this fund:

- it will have lower volatility for the individual investor than a REIT fund -- maybe the design is flawed, but from the point of view of the individual unit holder, it's still there

In addition, it has lower leverage. And in 2008 we saw that show up in spades in the REIT index fund. I shudder to think what it would have felt like if you'd wedged up a la Swensen or Malkiel and had 20% in REIT index funds in 2008, say in retirement. The fact that it recovered proves nothing, because there's no way of knowing if the world's central banks and Treasuries will be so effective the next financial crisis (see Japan- -JREITs must be down something like 70% 1990 to 2012 say?).

- it should have higher correlation with inflation. An important advantage to RE investing (against straight stock market investing)

As I argued in the wbern (William Bernstein) REIT valuation thread, CRE has its own supercycle driven by economic factors and leverage (technically it's exactly what Jay Forrester and the other Systems Dynamics people at MIT/ Dartmouth predicted for such a market, where you have inelastic supply and demand, large inventories, and forecast error). Which means, taking a heretical view, you can 'time' CRE-- be aware that it has bubbles and busts.

In summary, I am a lot more comfortable with people investing in TREA than I am in the REIT index fund, because of the volatility shown in 2008 by the latter.

We've had people here talking about 20, 25% in CRE. I think that's too much, but 10% is not going to sink someone-- particularly if you have access to TREA. And FWIW we are far too early into this economic cycle to call for another CRE blowout-- history seems to give a periodicity of something like 11-14 years. We've got another 7 years to go (at least) on that basis.

One might consider combining TREA with the international RE index fund, for maximimum diversification (and Larry Swedroe's point that the latter looks cheap). However the international RE fund is not a pure REIT fund.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Valuethinker »

steve r wrote:
beardsworth wrote:
manwithnoname wrote:TREA is just a money losing vampire squid.
I consider the user's phrase-borrowing here to be markedly inapt.
+1
It all makes no sense.
manwithnoname wrote:... just another example of how Mother TIAA is subsidizing the disappointing RE investments of TREA which is a separate account, not part of TIAA. As a comparison CREF reimburses TIAA for the cost of TIAA operations
If "Mother TIAA" / CREF is subsidizing TREA ... as is being suggested ... it would suggest the exact opposite. Shouldn't I want to invest in a fund being subsidized, other things equal?
One is, in effect, accusing TIAA of a violation of fiduciary duty, if the main insurance fund is 'subsidising' the TIAA RE. That's not impossible, but I would be they are doing nothing that has not been signed off on by their legal department, their legal advisers and their auditors.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by steve r »

Browser wrote:I once ran correlations between TREA returns with stocks and bonds and found about an equal correlation to each. One problem with doing that is the low volatility of TREA which dampens the correlation coefficients. .... You can't ignore the big hit that TREA took in 2008 along with stocks - as did REITS. It can act a lot more like stocks than bonds in a bear market.
+1
Using annual data for 18 years I found the same ... bunched around zero, slightly negative with my bond index option. Slightly positive with my stock market option.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Valuethinker »

steve r wrote:
Browser wrote:I once ran correlations between TREA returns with stocks and bonds and found about an equal correlation to each. One problem with doing that is the low volatility of TREA which dampens the correlation coefficients. .... You can't ignore the big hit that TREA took in 2008 along with stocks - as did REITS. It can act a lot more like stocks than bonds in a bear market.
+1
Using annual data for 18 years I found the same ... bunched around zero, slightly negative with my bond index option. Slightly positive with my stock market option.
There's no question that investing in a REIT fund, or TIAA RE, is investing in a real, not nominal, asset class.

Ie you have to treat it as equity exposure, not bond exposure.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by sscritic »

Valuethinker wrote: I think we have to accept our interlocutor has a particular ideological bias which is applied to this fund. Hence the completely irrelevant comparison of management fees-- doesn't even seem to understand the issue.
If you go back to the thread linked to by livesoft, our interlocutor asked the following, which I found quite revealing:
Thu Dec 26, 2013 7:42 am
when you cash out of the fund can you receive a lump sum or are payments only made in installments over a 10 year period?
Perhaps he has learned more about the fund since Boxing Day, but perhaps he knows no more now than he did then.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by livesoft »

OK, I am ready to cash out and roll this TREA money over to an IRA. I looked on the TIAA-CREF website to find information about how to roll over to an IRA. I found nothing. I found lots of info about how I should want to consolidate all my retirement accounts to a single vendor, namely TIAA-CREF, and lots of info on how to roll over my external accounts to TIAA-CREF.

I suppose I will have to make a phone call or appointment with the local office. Sigh!
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by ResearchMed »

livesoft wrote:OK, I am ready to cash out and roll this TREA money over to an IRA. I looked on the TIAA-CREF website to find information about how to roll over to an IRA. I found nothing. I found lots of info about how I should want to consolidate all my retirement accounts to a single vendor, namely TIAA-CREF, and lots of info on how to roll over my external accounts to TIAA-CREF.

I suppose I will have to make a phone call or appointment with the local office. Sigh!
You need to call TIAA-CREF to remove money from the TREA, all or in part (but only one withdrawal per quarter is allowed, regardless of amount).
This can NOT be done "online".

Then put it in your TIAA/CREF money market fund (or other selection of your choice).

Contact whichever vendor (Vanguard, Schwab, Fidelity, etc.) you want to have your money move TO, and they can help you with the paperwork and also help PULL the money from TIAA-CREF.

TIAA-CREF can be remarkably slow to relinquish custody of the money while they "process" the request.
The receiving vendor can help move this along.

You might have to get a form from TIAA-CREF. If it's a 403b/401k type account, your Employer (HR/Benefits) may have a copy for you.

RM
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by sscritic »

livesoft wrote:OK, I am ready to cash out and roll this TREA money over to an IRA. I looked on the TIAA-CREF website to find information about how to roll over to an IRA. I found nothing. I found lots of info about how I should want to consolidate all my retirement accounts to a single vendor, namely TIAA-CREF, and lots of info on how to roll over my external accounts to TIAA-CREF.

I suppose I will have to make a phone call or appointment with the local office. Sigh!
You know better. Initiate at the receiving end. They are the ones getting your money; they are the ones who want this to go through.

P.S. The receiving end too will have lots of info on how to roll over your external accounts. Try this: search for rollover at Vanguard and see how many articles there are on getting your money out.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by MN Finance »

Transferring from RE to another investment is obviously a phone call. Rolling funds to another co will need to be triggered on the TIAA side, not the gaining firm. They will send you a rollover form where you will indicate the account number and address for the gaining account.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by ResearchMed »

MN Finance wrote:Transferring from RE to another investment is obviously a phone call. Rolling funds to another co will need to be triggered on the TIAA side, not the gaining firm. They will send you a rollover form where you will indicate the account number and address for the gaining account.
The receiving vendor can submit the proper forms (signed by account holder) for both vendors to the sending vendor, and then follow up regularly.

This is what Vanguard did for us, for the transfers from TIAA-CREF.

RM
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by livesoft »

MN Finance wrote:Transferring from RE to another investment is obviously a phone call. Rolling funds to another co will need to be triggered on the TIAA side, not the gaining firm. They will send you a rollover form where you will indicate the account number and address for the gaining account.
You mean that vendors aren't required by law to have a button labelled "Transfer to Vanguard" on their web site? What's up with that? :annoyed
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by steve r »

Valuethinker wrote:
steve r wrote: There's no question that investing in a REIT fund, or TIAA RE, is investing in a real, not nominal, asset class.

you have to treat it as equity exposure, not bond exposure.
I am convinced this is correct on the REIT front. Not to mention its leverage.

TREA is 20-25% cash ... I think you could safely consider that portion fixed income. Perhaps even a slightly more ... How much more would be a guess at best ...

I did fully agree with your other post.
Valuethinker wrote:
MN Finance wrote: ...
Measures of Sharp Ratio are probably suspect for similar reasons (I'd have to think about that)-- the volatility is 'damped' artificially.




I measure the Sharp of TREA using annual data 1996 to 2013... annual data is somewhat a problem I acknowledge ... somewhat to my surprise REIT index outperformed. (.384 TREA versus .468) ... I suspect this can be explained by the lower returns portion of the ratio. Obviously, daily or weekly data would probably lead to different results.
Valuethinker wrote:
MN Finance wrote: ...
In summary, I am a lot more comfortable with people investing in TREA than I am in the REIT index fund, because of the volatility shown in 2008 by the latter.

We've had people here talking about 20, 25% in CRE. I think that's too much, but 10% is not going to sink someone-- particularly if you have access to TREA.
Thanks .... I was thinking about going that high ... my current portfolio is and has been:
- 36% Total Bond
- 16% of each of the following indexes (SP500, Extended Market, and International - all Vanguard Signal options).

Where I am at is about right ... I picked this when I started without much thought as I had no money in at the time. I see no reason to change. (Ages 46, other fund companies slightly more aggressive than this -- but I like to manage each somewhat separately as I cannot rebalance from one fund company to another).
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by nisiprius »

When I held TIAA RE--I am embarrassed to name the time period as it will make me sound like a market timing genius, when in fact it was the most foolish of fool's luck--it was obvious to me that it did not behave in any way like cash, bonds, or stocks, and I therefore just put it in a separate category... and stared at it. It was never more than 5% of my portfolio, though, so it didn't bother me too much.

For most purposes, the obvious thing to do would be to be conservative, and think of it as being like stocks when assessing risk, but like bonds when assessing return.

Something I never got around to doing... now that I'm retired I think I would actually do it if I still owned the fund... is to take the time to drive to the address of the closest property and take a look at what I own.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by ResearchMed »

nisiprius wrote:When I held TIAA RE--I am embarrassed to name the time period as it will make me sound like a market timing genius, when in fact it was the most foolish of fool's luck--it was obvious to me that it did not behave in any way like cash, bonds, or stocks, and I therefore just put it in a separate category... and stared at it. It was never more than 5% of my portfolio, though, so it didn't bother me too much.

For most purposes, the obvious thing to do would be to be conservative, and think of it as being like stocks when assessing risk, but like bonds when assessing return.

Something I never got around to doing... now that I'm retired I think I would actually do it if I still owned the fund... is to take the time to drive to the address of the closest property and take a look at what I own.
We can vouch for the fact that at least some of TREA's holdings are top shelf office buildings (assuming the ownership claims are true, which we have not checked, but don't really doubt).

Seen 'em, been in 'em :happy

RM
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by sscritic »

nisiprius wrote: Something I never got around to doing... now that I'm retired I think I would actually do it if I still owned the fund... is to take the time to drive to the address of the closest property and take a look at what I own.
Would it be one of these?
99 High Street
Northeast RA Industrial Portfolio
Residence at Rivers Edge
501 Boylston Street

or perhaps this?
Ten & Twenty Westport Road
(as of June 30, 2013)
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by DonCamillo »

nisiprius wrote:Something I never got around to doing... now that I'm retired I think I would actually do it if I still owned the fund... is to take the time to drive to the address of the closest property and take a look at what I own.
I looked at the list of properties and found two that I actually worked in. Office buildings leased to a Fortune 500 company.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Timoneer »

ResearchMed wrote:
livesoft wrote:OK, I am ready to cash out and roll this TREA money over to an IRA....!
You need to call TIAA-CREF to remove money from the TREA, all or in part (but only one withdrawal per quarter is allowed, regardless of amount).
This can NOT be done "online".

Then put it in your TIAA/CREF money market fund (or other selection of your choice).

Contact whichever vendor (Vanguard, Schwab, Fidelity, etc.) you want to have your money move TO, and they can help you with the paperwork and also help PULL the money from TIAA-CREF.

TIAA-CREF can be remarkably slow to relinquish custody of the money while they "process" the request.
The receiving vendor can help move this along.

You might have to get a form from TIAA-CREF. If it's a 403b/401k type account, your Employer (HR/Benefits) may have a copy for you.

RM
If the funds are in a 403b/401k, I have found it easier to do it in two steps.
First, is to call TC and ask to roll it over to an IRA within TC. This will involve paperwork with the employer, verifying status and conditions of the plan. If married, a spousal waiver is needed for IRA conversion. Trying to involve a third party, like Vanguard or Fidelity at this stage is messy, and will likely result in a few go arounds and finger pointing.
Once the conversion to IRA is complete, then call Vanguard, FIdelity, or other institution and ask them to pull the funds into a new IRA. Much less aggravation than trying to pry it out of TC.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by DonCamillo »

livesoft wrote:OK, I am ready to cash out and roll this TREA money over to an IRA. I looked on the TIAA-CREF website to find information about how to roll over to an IRA. I found nothing. I found lots of info about how I should want to consolidate all my retirement accounts to a single vendor, namely TIAA-CREF, and lots of info on how to roll over my external accounts to TIAA-CREF.

I suppose I will have to make a phone call or appointment with the local office. Sigh!
You are calling the wrong person. They stand to lose, and have nothing to gain, so they have no incentive to make it easy on you. Call the company you will transfer to.

I moved my Roth from TIAA to a different vendor in 2012 and my IRA to yet another vendor in 2014. In both cases, I did it mainly to reduce expenses, since TIAA-CREF has moved from a non-profit that works for its annuitants to a for-profit that pays big bucks to executives.

But, in both cases, I did it over the telephone. I called the vendor I was going to during business hours. They conferenced in TIAA-CREF and arranged the transfer. Then the new vendor sent me the paperwork. Last month's transfer was prearranged in mid-December to take place right ofter the new year.

Note that TIAA-CREF will cash your accounts and sit on the money for about a week before they mail a check to the new company. It was quite annoying in January. My IRA was sold at the big drop on January 2 and reinvested during a subsequent up day for the market, costing me more than four years of the difference in expenses I was saving. The Roth transfer took place over the Thanksgiving holiday in 2012 and also had a bad execution. It took even longer. The bad experience with that transfer helped motivate the IRA transfer. The bad experience with the IRA transfer will probably lead to me moving my other accounts right after I retire.
Last edited by DonCamillo on Sun Feb 02, 2014 10:16 am, edited 1 time in total.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by oldman »

At age 80 and retired, I try to KISS and avoid real estate and more.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by ResearchMed »

Timoneer wrote:
ResearchMed wrote:
livesoft wrote:OK, I am ready to cash out and roll this TREA money over to an IRA....!
You need to call TIAA-CREF to remove money from the TREA, all or in part (but only one withdrawal per quarter is allowed, regardless of amount).
This can NOT be done "online".

Then put it in your TIAA/CREF money market fund (or other selection of your choice).

Contact whichever vendor (Vanguard, Schwab, Fidelity, etc.) you want to have your money move TO, and they can help you with the paperwork and also help PULL the money from TIAA-CREF.

TIAA-CREF can be remarkably slow to relinquish custody of the money while they "process" the request.
The receiving vendor can help move this along.

You might have to get a form from TIAA-CREF. If it's a 403b/401k type account, your Employer (HR/Benefits) may have a copy for you.

RM
If the funds are in a 403b/401k, I have found it easier to do it in two steps.
First, is to call TC and ask to roll it over to an IRA within TC. This will involve paperwork with the employer, verifying status and conditions of the plan. If married, a spousal waiver is needed for IRA conversion. Trying to involve a third party, like Vanguard or Fidelity at this stage is messy, and will likely result in a few go arounds and finger pointing.
Once the conversion to IRA is complete, then call Vanguard, FIdelity, or other institution and ask them to pull the funds into a new IRA. Much less aggravation than trying to pry it out of TC.
Thanks.

Not sure if this would work any better, but for those of us still employed, moving anything from a 4013b to an IRA is not allowed.

All we can do is move $$ among the now three 403b vendors (TIAA-CREF, Vanguard, Fidelity).
It all started in TIAA-CREF, as that used to be the only choice.

Once we had choices to move away from TIAA-CREF (and also once the funds offered within TIAA-CREF were drastically reduced), we've done that over time.
There is still a substantial amount remaining, and we use that for some core funds, as there is little other choice, except for TREA.

But your suggestion (final two sentences) is what we suggested, except using the 403b monies.
Not quite sure why you are suggesting the intermediate step of transferring to an IRA, unless someone already wants to do that (and is allowed to do so).

RM
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Levett »

Nisi wrote:

"it was obvious to me that it did not behave in any way like cash, bonds, or stocks, and I therefore just put it in a separate category"

Indeed.

And that's precisely what TIAA says: it's a separate category shockingly called --drum roll please--Real Estate when it appears in some recommended model portfolios.

Imagine that! ;-)

Lev
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by House Blend »

Timoneer wrote:
ResearchMed wrote:
livesoft wrote:OK, I am ready to cash out and roll this TREA money over to an IRA....!
You need to call TIAA-CREF to remove money from the TREA, all or in part (but only one withdrawal per quarter is allowed, regardless of amount).
This can NOT be done "online".

Then put it in your TIAA/CREF money market fund (or other selection of your choice).

Contact whichever vendor (Vanguard, Schwab, Fidelity, etc.) you want to have your money move TO, and they can help you with the paperwork and also help PULL the money from TIAA-CREF.

TIAA-CREF can be remarkably slow to relinquish custody of the money while they "process" the request.
The receiving vendor can help move this along.

You might have to get a form from TIAA-CREF. If it's a 403b/401k type account, your Employer (HR/Benefits) may have a copy for you.

RM
If the funds are in a 403b/401k, I have found it easier to do it in two steps.
First, is to call TC and ask to roll it over to an IRA within TC. This will involve paperwork with the employer, verifying status and conditions of the plan. If married, a spousal waiver is needed for IRA conversion. Trying to involve a third party, like Vanguard or Fidelity at this stage is messy, and will likely result in a few go arounds and finger pointing.
Once the conversion to IRA is complete, then call Vanguard, FIdelity, or other institution and ask them to pull the funds into a new IRA. Much less aggravation than trying to pry it out of TC.
I've done several rollovers from T-C to Vanguard, as well as rollovers internal to T-C (403(b) to IRA). The latter was actually the most time consuming--it took two weeks out-of-market even though the money stayed in house. I do agree that a major cause of delays when rolling out of T-C is that they will need to follow certain procedures peculiar to ERISA and your plan rules, so it is best IMO to get those out of the way first.

So despite standard and well-founded BH advice to initiate rollovers at the receiving institution, my recommendation for (say) a T-C 403(b) to VG IRA rollover is to do it in one step, but starting at T-C.

A detailed description of my tactics is here:
http://www.bogleheads.org/forum/viewtop ... 80#p922680

BTW: There's no need to exit from TREA first.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by Garco »

The main reason why I plan to stay with TIAA-CREF when I retire is to hold TREA, and secondarily at this point to preserve my right to annuitize my TIAA Traditional holdings with their favorable "vintages" (which are based on the year the money was deposited in the fund). Transferring money from the latter (which takes some time, i.e., years, in any case) typically entails a loss in value if you are considering a partial annuitization at some point. In the meantime (at this time) I'm earning a nice and highly trustworthy annual return. For this reason, if I were to transfer any money out of TIAA-CREF after retirement, it would only be a "partial" transfer from non-TREA and non-Traditional holdings. In the meantime, I have a variety of tax deferred and taxable investments administered by a different company and brokerage; not all my retirement savings are at TIAA-CREF.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by abuss368 »

I must say I am happy with the Vanguard US and International REIT Index funds.
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Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Post by steve r »

livesoft wrote:It's a fund that lives in the past. Even my Grandmother could market time this baby and you should too.

Here's the bogleheads' thread on this one:
http://www.bogleheads.org/forum/viewtop ... st=1898039

T
Livesoft - Thanks for the link (I think I ignored it because of the Madoff topic - but it had good info buried in inside)

The "Green Street Advisors Commerical Property Price Index" is up in the last 12 months ... which, if I understand things leads by many months. That index was up nearly 10 percent last year ... so not sure why the need to sell.

Plus, if you market time, wouldn't you wait to see a downturn.

I guess I am just curious what am I not seeing.

Perhaps you are moving out for the same reasons I am not moving money into TIAA (and out of Vanguard and Fidelity -- I can move money out of old 403b into new 403b -- but not the other way around)). Other options are better. But for my TIAA money (employer) -- it seems like a good diversifier (obviously bonds are better and I should and do own more bonds than TREA).

Comments welcome.

Thanks.



By the way, the Green Street Index is also fairly stable (often not changing at all month to month).
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