TIAA-CREF Real Estate: Anyone Buying These Days?

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TIAA-CREF Real Estate: Anyone Buying These Days?

Postby cinghiale » Tue Apr 20, 2010 10:07 am

I'm looking to rebalance my TIAA-CREF account this month. Over the last 12 months, the Equity Index fund has soared, the Bond fund has moved up slightly, and the Real Estate fund has stunk out loud. Classic rebalancing thinking would say that it is time to sell high (Equities) and buy low (Real Estate). I know that TIAA-CREF Real Estate does *not* function the way most REITs do, and there have been some good discussions in this forum about picking and choosing when to enter and exit this fund. For those in TIAA-CREF, who have made these decisions in the past, and/or who have some insights, what say ye? Time to rebalance and move some additional funds into the RE fund? Any additonal variables that I am not considering?
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Postby beardsworth » Tue Apr 20, 2010 10:44 am

Although you refer to the TIAA Real Estate "fund," I assume you actually mean the direct property ownership TIAA Real Estate Account variable annuity which has fallen considerably from its once–lofty share value (as opposed to TIAA's real estate stock–owning mutual fund, which has been doing quite well, i.e., has not "stunk out loud").

There's a long conversation in progress, on Morningstar's TIAA–CREF forum, about whether this is a good time to re–enter the Real Estate Account. (The thread does takes some unrelated detours into the Goldman Sachs legal affair before returning to TIAA Real Estate Account.)

http://socialize.morningstar.com/NewSoc ... px#2804930

Marc
Last edited by beardsworth on Tue Apr 20, 2010 10:49 am, edited 1 time in total.
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Postby cinghiale » Tue Apr 20, 2010 10:49 am

Thanks for the clarification. In this case, you are right in assuming that I am referring to the account, not the mutual fund.
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Postby DickBenson » Tue Apr 20, 2010 12:32 pm

Before making a significant investment, I would recommend looking over the SEC 10K report on REA for 2009.

http://www.tiaa-cref.org/ucm/groups/con ... 007828.pdf

In particular, you might try to get a feel for the impact of upcoming maturities of leases and mortgage loans..... and of course future appraisals of their properties.

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Postby PGR » Tue Apr 20, 2010 1:55 pm

Yes.

Of my 'Real-Estate' allocation about 2/3rds are in the TIAA Real Estate annuity (no symbol) and about 1/3rd in the TIAA-CREF REIT (TRRSX?). But I wonder if it wouldn't be just as good if not better to stick with 100% in the annuity.
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Postby The Wizard » Tue Apr 20, 2010 2:10 pm

DickBenson wrote:Before making a significant investment, I would recommend looking over the SEC 10K report on REA for 2009.

http://www.tiaa-cref.org/ucm/groups/con ... 007828.pdf


That's 99 pages.

It's hard for the unschooled amateur to read through something like that and red-flag or green-flag various sections based on knowledgeable criteria.
Last edited by The Wizard on Tue Apr 20, 2010 5:00 pm, edited 1 time in total.
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Postby montesquieu » Tue Apr 20, 2010 2:37 pm

It's in Grok's recommended portfolio:

viewtopic.php?t=48846&mrr=1263666667
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Postby raywax » Tue Apr 20, 2010 3:38 pm

The Wizard wrote:
That's 99 pages.

It's hard for the unschooled amateur to read through something and red-flag or green-flag various section based on knowledgeable criteria.


That may be the case but IF you do not understand the "fund" and the current market for CRE (commercial real estate) then you best not invest in it right now. The M* discussion will show you that not everyone in that forum (myself included) believes it is time to jump (back or simply) into the TREA.

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TREA

Postby kdmusic » Tue Apr 20, 2010 4:10 pm

5 percent of my portfolio is REIT -- half TREA and half Vanguard Reit. I just rebalanced the Reit portion -- sold some vg, bought some trea. Mindlessly, without reading reports -- for what it's worth. also sold small value, bought large value, bought tips, etc etc. just doing what my ips says to do. If VT were to weigh in here, I might listen.

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will start small bi-weekly purchases in 403b

Postby greenspam » Tue Apr 20, 2010 5:05 pm

i sold 100% of the real estate acct while it was bubble-icious, and have made no new purchases since.

i do think now is about time to start nibbling, meaning that i don't plan to make any large exchange from another asset class to the real estate acct just yet, but,

i will start buying the real estate acct again via automatic bi-weekly contributions from my paycheck.
as always, | peace, | greenie.
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Postby novastepp » Wed Jun 29, 2011 11:06 pm

Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us
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Postby livesoft » Wed Jun 29, 2011 11:15 pm

Bought some at the beginning of June. I have a TPA out of TIAA traditional going and the proceeds go into TREA automatically. So that's the when and why. No thinking at all about it as this was set up a few years ago.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Postby peter71 » Wed Jun 29, 2011 11:18 pm

novastepp wrote:Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us


Hi Nova,

Funny that a Fight Club enthusiast would ask! Might I suggest . . .

"First rule of loading up on TIAA Real Estate: never talk about loading up on TIAA Real Estate." :D

At least that's what I've decided as the restrictions on investing in it mount.

Best,
Pete
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Postby avalpert » Wed Jun 29, 2011 11:37 pm

Well, it is up ~24% since this question was posed here, around twice the return of VTI over the same period.

I did let my holdings in this drift downward during 08/09 and it went a bit below my re-balancing band. But I brought it back up to my 5% allocation target at the beginning of 2010 and am quite comfortable with that.
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Postby novastepp » Wed Jun 29, 2011 11:40 pm

peter71 wrote:
novastepp wrote:Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us


Hi Nova,

Funny that a Fight Club enthusiast would ask! Might I suggest . . .

"First rule of loading up on TIAA Real Estate: never talk about loading up on TIAA Real Estate." :D

At least that's what I've decided as the restrictions on investing in it mount.

Best,
Pete


Hahah. touche'. I was just bumping this dusty thread for curiousity's sake.
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Postby Aptenodytes » Thu Jun 30, 2011 12:21 am

novastepp wrote:Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us

I have a Real Estate category in my AA, at 7% of the total. Of that about half is in this TIAA account and the other half in the Vanguard REIT. I've owned the TIAA account since about 1995.

At present I'm not having to buy more of it because it is rising faster than the rest of my portfolio. I do not plan to adjust the AA.
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Postby Aptenodytes » Thu Jun 30, 2011 12:25 am

novastepp wrote:Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us

I have a Real Estate category in my AA, at 7% of the total. Of that about half is in this TIAA account and the other half in the Vanguard REIT. I've owned the TIAA account since about 1995.

At present I'm not having to buy more of it because it is rising faster than the rest of my portfolio. I do not plan to adjust the AA.
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Postby sscritic » Thu Jun 30, 2011 12:35 am

I bought some June 2, 2010 and some more exactly one year ago on June 29, 2010. Nothing since. It's about 5% of my total net worth.
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Postby novastepp » Thu Jun 30, 2011 9:05 am

Thanks for the replys. I am considering making the TIAA Real Estate Fund about 10% of my holdings in my 403b. But until I know more about real estate and its holdings specifically, I am holding off. Just curious if Bogleheads were buying in.
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Postby Valuethinker » Thu Jun 30, 2011 12:26 pm

novastepp wrote:Thanks for the replys. I am considering making the TIAA Real Estate Fund about 10% of my holdings in my 403b. But until I know more about real estate and its holdings specifically, I am holding off. Just curious if Bogleheads were buying in.


There is a TIAA forum on Morningstar with a lot of expertise.

We've discussed it here many times:

- blue chip and conservative portfolio with experienced managers and good investor communications
- tracks REIT indices but with a time lag (up and down)
- less price volatility than above (for same reasons)
- liquidity restrictions etc. which may be of a concern
- Swensen discusses in some detail (but he is on the advisory board)
- changes in policy re leverage and fees
- it's unique amongst retail investment vehicles available to US investor
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Postby Alex Frakt » Thu Jun 30, 2011 1:21 pm

We've gone into great depth on previous threads. I'd start with these two - note that post dates as you read through them

viewtopic.php?t=44675
viewtopic.php?t=31038

A search that will get all of them is: http://www.google.com/search?num=50&hl= ... ads.org&q="TIAA+Real+Estate"
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Postby novastepp » Thu Jun 30, 2011 5:47 pm

Valuethinker wrote:
novastepp wrote:Thanks for the replys. I am considering making the TIAA Real Estate Fund about 10% of my holdings in my 403b. But until I know more about real estate and its holdings specifically, I am holding off. Just curious if Bogleheads were buying in.


There is a TIAA forum on Morningstar with a lot of expertise.

We've discussed it here many times:

- blue chip and conservative portfolio with experienced managers and good investor communications
- tracks REIT indices but with a time lag (up and down)
- less price volatility than above (for same reasons)
- liquidity restrictions etc. which may be of a concern
- Swensen discusses in some detail (but he is on the advisory board)
- changes in policy re leverage and fees
- it's unique amongst retail investment vehicles available to US investor


The TIAA Real Estate Account doesn't track REITs it is actually an account that invests directly in real estate.

My plan does not have transfer restrictions either, but thanks for the input!
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Postby novastepp » Thu Jun 30, 2011 5:49 pm

Alex Frakt wrote:We've gone into great depth on previous threads. I'd start with these two - note that post dates as you read through them

viewtopic.php?t=44675
viewtopic.php?t=31038

A search that will get all of them is: http://www.google.com/search?num=50&hl= ... ads.org&q="TIAA+Real+Estate"


I actually read one of those just yesterday, haha. I also have posted an ongoing thread at the M* Forum that has given me much to consider about this fund as well.

Thanks for the links. I decided to bump this thread since it kind of asked teh question I was interested in, whether or not a lot of folks around here were in the fund at the moment.

Thanks again.
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Postby grok87 » Thu Jun 30, 2011 8:40 pm

novastepp wrote:
Alex Frakt wrote:We've gone into great depth on previous threads. I'd start with these two - note that post dates as you read through them

viewtopic.php?t=44675
viewtopic.php?t=31038

A search that will get all of them is: http://www.google.com/search?num=50&hl= ... ads.org&q="TIAA+Real+Estate"


I actually read one of those just yesterday, haha. I also have posted an ongoing thread at the M* Forum that has given me much to consider about this fund as well.

Thanks for the links. I decided to bump this thread since it kind of asked teh question I was interested in, whether or not a lot of folks around here were in the fund at the moment.

Thanks again.

I'm in, but not adding as I would have to roll over money to add to it and that's not convenient right now.
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Postby House Blend » Thu Jun 30, 2011 10:42 pm

novastepp wrote:My plan does not have transfer restrictions either, but thanks for the input!


Yes it does.

1. At most one transfer out per quarter.
2. If you want to transfer $X in, then $X + Current Balance must be < $150K.

(There are exceptions, but this is a good first approximation.)
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Postby Valuethinker » Fri Jul 01, 2011 6:14 am

novastepp wrote:
Valuethinker wrote:
novastepp wrote:Thanks for the replys. I am considering making the TIAA Real Estate Fund about 10% of my holdings in my 403b. But until I know more about real estate and its holdings specifically, I am holding off. Just curious if Bogleheads were buying in.


There is a TIAA forum on Morningstar with a lot of expertise.

We've discussed it here many times:

- blue chip and conservative portfolio with experienced managers and good investor communications
- tracks REIT indices but with a time lag (up and down)
- less price volatility than above (for same reasons)
- liquidity restrictions etc. which may be of a concern
- Swensen discusses in some detail (but he is on the advisory board)
- changes in policy re leverage and fees
- it's unique amongst retail investment vehicles available to US investor


The TIAA Real Estate Account doesn't track REITs it is actually an account that invests directly in real estate.

My plan does not have transfer restrictions either, but thanks for the input!


You have misinterpreted what I wrote. My point is subtler than that and arises from the way the TIAA NAV is calculated.

Do a search on 'valuethinker' on the TIAA Forum where other posters have aptly summarized and cited my views there and here.
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Postby novastepp » Fri Jul 01, 2011 11:21 am

House Blend wrote:
novastepp wrote:My plan does not have transfer restrictions either, but thanks for the input!


Yes it does.

1. At most one transfer out per quarter.
2. If you want to transfer $X in, then $X + Current Balance must be < $150K.

(There are exceptions, but this is a good first approximation.)


haha. You are correct.
I laugh because I have yet to invest in the account and have such a small new acculutaion balance that the transfer amount would be plently lower than the 150k mark. :) Thanks, House Blend
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Postby novastepp » Fri Jul 01, 2011 11:21 am

Valuethinker wrote:
novastepp wrote:
Valuethinker wrote:
novastepp wrote:Thanks for the replys. I am considering making the TIAA Real Estate Fund about 10% of my holdings in my 403b. But until I know more about real estate and its holdings specifically, I am holding off. Just curious if Bogleheads were buying in.


There is a TIAA forum on Morningstar with a lot of expertise.

We've discussed it here many times:

- blue chip and conservative portfolio with experienced managers and good investor communications
- tracks REIT indices but with a time lag (up and down)
- less price volatility than above (for same reasons)
- liquidity restrictions etc. which may be of a concern
- Swensen discusses in some detail (but he is on the advisory board)
- changes in policy re leverage and fees
- it's unique amongst retail investment vehicles available to US investor


The TIAA Real Estate Account doesn't track REITs it is actually an account that invests directly in real estate.

My plan does not have transfer restrictions either, but thanks for the input!


You have misinterpreted what I wrote. My point is subtler than that and arises from the way the TIAA NAV is calculated.

Do a search on 'valuethinker' on the TIAA Forum where other posters have aptly summarized and cited my views there and here.


Will do. Thanks, Vauethinker.
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Postby jbk » Fri Jul 01, 2011 1:41 pm

novastepp wrote:Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us


We hold 10% of our portfolio here because it appears to be uncorrelated to either equities or bonds and is therefore an excellent diversifier.

Jay
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Postby Martindo » Fri Jul 01, 2011 4:43 pm

We have 12% of our total portfolio in TREA. Got out in '08 sometime and back in about a year ago.

The TREA seems like a remarkable opportunity, judging from its total history. I haven't tried to understand it, but treat it like a black-box with a very interesting NAV curse. (Of course I know it invests in direct ownership of high quality commercial properties, but I haven't tried to pick the machinery apart like the guys over at M*.)
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Postby cinghiale » Sat Jul 02, 2011 12:48 pm

TREA is offered through a 403 account at work, so I have made bi-weekly contributions into it since initiating this thread last year. I keep equal amounts of the Equity Index, Bond, and Real Estate accounts, which makes rebalancing easy. I must admit to a degree of satification with "staying the course" with this asset allocation in the 403. I have no plans to increase or decrease the percentages in this arrangement, as it has thus far kept the overall RE allocation at about 4%-5% of the total family portfolio.
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Postby K-SawDude » Sat Jul 02, 2011 6:31 pm

As a new investor, I've been pretty happy with TREA over the last couple of years. A couple of questions about its role in the portfolio, though:

(1) How do Bogleheads generally feel about the very high expense ratio of TREA (over 1% for most investors, I think). Anyone think that's a problem?

(2) Are others who have both TREA and a mortgage counting both of these elements as "Real Estate" portions of the portfolio? Or are they different entities?
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Postby tibbitts » Sat Jul 02, 2011 6:49 pm

K-SawDude wrote:As a new investor, I've been pretty happy with TREA over the last couple of years. A couple of questions about its role in the portfolio, though:

(1) How do Bogleheads generally feel about the very high expense ratio of TREA (over 1% for most investors, I think). Anyone think that's a problem?

(2) Are others who have both TREA and a mortgage counting both of these elements as "Real Estate" portions of the portfolio? Or are they different entities?

Everybody hates that the expense has doubled from .58 or whatever it was, and of course people who have held are still way underwater from the fund's loftier days.

I would treat TREA like you owned rental property that you bought (mostly) for cash, regardless if you have a mortgage or not. The difference is that it isn't like rental property you could actually buy, at least not what I see around here. Property values around here never seemed to change that much, up or down.

Paul
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Postby novastepp » Sat Jul 02, 2011 7:53 pm

K-SawDude wrote:As a new investor, I've been pretty happy with TREA over the last couple of years. A couple of questions about its role in the portfolio, though:

(1) How do Bogleheads generally feel about the very high expense ratio of TREA (over 1% for most investors, I think). Anyone think that's a problem?

(2) Are others who have both TREA and a mortgage counting both of these elements as "Real Estate" portions of the portfolio? Or are they different entities?


Over at Morningstar, they mention that the expense is higher compared to many index funds, but to remember that TREA is a class all its own. You are paying the expense to own that unique investment.
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TIAA real estate fund

Postby Minimumpc » Wed Jul 27, 2011 8:01 pm

I have over 90% of my retirement in the real estate fund since last october.
Very nervous about balancing. Just 5 years to retirement.
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Re: TIAA real estate fund

Postby JimInIllinois » Wed Jul 27, 2011 11:55 pm

Minimumpc wrote:I have over 90% of my retirement in the real estate fund since last october.
Very nervous about balancing. Just 5 years to retirement.


I'm at around 25% and still buying with new money. I want the 70% of the real estate account that is actually real estate to be 20% of my portfolio, as long as it's going up. If it starts going down steadily I'll sell again.

I don't think I would want 90% of my portfolio in a single anything, but you said "retirement" so I'm going to assume you have other assets in taxable accounts in case there is some horrible accounting scandal at TIAA-CREF.
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Postby nisiprius » Thu Jul 28, 2011 5:20 pm

Believe it or not, I held this account from inception until 2007. I wish I could claim market-timing foresight, but 2007 merely happened to be the year I decided to consolidate institutions and rolled over almost everything in my TIAA-CREF account to Vanguard.

It always seemed to me that I ought to visit and inspect some of the properties, but even at the very end there were none that were close enough to overcome my laziness.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: TIAA real estate fund

Postby Valuethinker » Fri Jul 29, 2011 3:45 am

Minimumpc wrote:I have over 90% of my retirement in the real estate fund since last october.
Very nervous about balancing. Just 5 years to retirement.


You should not have more than 25% of your wealth in this fund.

Simple portfolio diversification mandates this.
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Postby rmark1 » Fri Jul 29, 2011 8:51 pm

'(1) How do Bogleheads generally feel about the very high expense ratio of TREA (over 1% for most investors, I think). Anyone think that's a problem? '

IIRC, TREA account expense ratio is a little different than a true mutual fund expense ratio, in that it includes property management costs.
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Postby tibbitts » Fri Jul 29, 2011 10:06 pm

rmark1 wrote:'(1) How do Bogleheads generally feel about the very high expense ratio of TREA (over 1% for most investors, I think). Anyone think that's a problem? '

IIRC, TREA account expense ratio is a little different than a true mutual fund expense ratio, in that it includes property management costs.

I don't think it does include property management costs, in terms of mowing the lawn, cleaning the windows, etc. I think the expense ratio is paying for what are really investment management costs. Obviously with a REIT you have property management costs, too, and they aren't in the fund expense ratio either. With a REIT you pay the mutual fund management fee, plus the REIT company for investment management, plus the REIT company for property management. So TIAA is still different, yet somewhat similar. And the expense ratio is still almost twice what it was a few years ago. I don't recall the increase corresponding to any change in tax reporting requirements (as was discussed with the recent increase in ratios for some VG funds, for example), so I think it was a real increase.

Paul
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