CREF Global Equities as 403b VTWSX equivalent?

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lassevirensghost
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CREF Global Equities as 403b VTWSX equivalent?

Post by lassevirensghost » Mon Oct 15, 2018 8:00 pm

My 403b is through TIAA-CREF. Right now I am in the debt reduction phase, but my employer does have a mandatory employee contribution that I have to make. The small amount of equities that I have in Vanguard is currently in Total World, and I am a firm believer in the fund so there is no wavering on that.

My question is, would CREF Global Equities be the closest approximation they have? Fact sheet here:

https://www.tiaa.org/public/pdf/ffs/194408159.pdf


CREF Global follows MSCI ACWI but has an active component to it, along with some indexing strategies. So just don't know how well it tracks. The other tempting option that I see would be CREF Stock, and I know there are fans of this fund in the BH community, but I also know it isn't as close to VTWSX.

Aside from CREF Global and CREF Stock, the other equity options are broken out by US market cap (both index and active), there is a growth fund, international funds (both active and an MSCI EAFE index fund), and an S&P 500 index fund. They are obviously just not as close to Total World so not bothering to list everything about them out here. The closest combo you could do is the international index and S&P index, but I want a one-fund equity solution.

Any input by those familiar with CREF Global is welcome!

EDIT: Perhaps the real question is how GOOD an equivalent of VTWSX is the CREF Global? If it isn't that good, should I just go with CREF Stock?
“Groucho, how do you invest your money?” | “All in bonds.” | “But Groucho, they don’t pay much return.” | “They do when you have a lot of em!”

sawhorse
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Re: CREF Global Equities as 403b VTWSX equivalent?

Post by sawhorse » Mon Oct 15, 2018 9:48 pm

What are your fund options? TIAA CREF options vary dramatically between employers and plans. One of my TIAA CREF 403b plans has a global equity index that is very comparable to Vanguard and has an even lower expense ratio.

beardsworth
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Re: CREF Global Equities as 403b VTWSX equivalent?

Post by beardsworth » Mon Oct 15, 2018 10:24 pm

lassevirensghost wrote:
Mon Oct 15, 2018 8:00 pm
Perhaps the real question is how GOOD an equivalent of VTWSX is the CREF Global? If it isn't that good, should I just go with CREF Stock?
For a long time, CREF Global Equities, despite its "global" name, only held stocks in developed markets, while CREF Stock, whose name makes no mention of international stocks (CREF Stock has been around since the 1950s), had branched out to include both developed and emerging foreign stocks.

TIAA's online prose description of Global Equities now states that it includes emerging markets, but I couldn't find many details, or whether they're held at something approaching market weight. I find TIAA's complicated website to be often unhelpful.

CREF Global Equities will be closer to a true global fund (if your comparison is to the Vanguard Total World Stock index), while CREF Stock has typically been about 70% U.S. and 30% foreign. If you're already holding Vanguard Total World elsewhere, then holding CREF Stock will still give you some international exposure but (considering these as a pair) tilt you a bit more toward U.S. If you're mainly attracted to global funds, then CREF Global Equities is truly global and will give you a slightly different approach (part index, part actively managed) from Vanguard's indexed-only Total World Stock.

I'm not sure the difference really matters all that much, unless you're really dedicated to a specific breakdown between domestic and foreign.

The PDF link you provided from TIAA's site is for the "R2" class of shares. Is that the class actually available in your plan? In terms of expense ratio, it's in the middle, between the more expensive R1 and the cheapest R3. But its expense ratio of 0.40% is still quite reasonable.

Topic Author
lassevirensghost
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Re: CREF Global Equities as 403b VTWSX equivalent?

Post by lassevirensghost » Tue Oct 16, 2018 1:50 pm

sawhorse wrote:
Mon Oct 15, 2018 9:48 pm
What are your fund options? TIAA CREF options vary dramatically between employers and plans. One of my TIAA CREF 403b plans has a global equity index that is very comparable to Vanguard and has an even lower expense ratio.
These are the ones available:

American Funds EuroPacific - .82 ER
CREF Global R2 - .4 ER
CREF Growth R2 - .32 ER
CREF Stock R2 - .37 ER
iShares S&P500 - .23 ER
Putnam Equity Income - .66 ER
TIAA-CREF international index - .21 ER
TIAA-CREF Quant Small Cap - .56 ER
TIAA-CREF Small Cap Blend Index - .31 ER
Vanguard Mid-Cap Index - .05 ER
Vanguard Real Estate Index - .12 ER
“Groucho, how do you invest your money?” | “All in bonds.” | “But Groucho, they don’t pay much return.” | “They do when you have a lot of em!”

Topic Author
lassevirensghost
Posts: 96
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Re: CREF Global Equities as 403b VTWSX equivalent?

Post by lassevirensghost » Tue Oct 16, 2018 1:53 pm

beardsworth wrote:
Mon Oct 15, 2018 10:24 pm
lassevirensghost wrote:
Mon Oct 15, 2018 8:00 pm
Perhaps the real question is how GOOD an equivalent of VTWSX is the CREF Global? If it isn't that good, should I just go with CREF Stock?
I'm not sure the difference really matters all that much, unless you're really dedicated to a specific breakdown between domestic and foreign.
I take it you mean the difference between Stock and Global? I agree. I went with Global and am making myself stick to it. The bigger problem I have as an investor is thinking I always have to do something to optimize. At this point I just need to pick something and stick to my guns.
“Groucho, how do you invest your money?” | “All in bonds.” | “But Groucho, they don’t pay much return.” | “They do when you have a lot of em!”

beardsworth
Posts: 2135
Joined: Fri Jun 15, 2007 4:02 pm

Re: CREF Global Equities as 403b VTWSX equivalent?

Post by beardsworth » Tue Oct 16, 2018 2:01 pm

lassevirensghost wrote:
Tue Oct 16, 2018 1:53 pm
beardsworth wrote:
Mon Oct 15, 2018 10:24 pm
lassevirensghost wrote:
Mon Oct 15, 2018 8:00 pm
Perhaps the real question is how GOOD an equivalent of VTWSX is the CREF Global? If it isn't that good, should I just go with CREF Stock?
I'm not sure the difference really matters all that much, unless you're really dedicated to a specific breakdown between domestic and foreign.
I take it you mean the difference between Stock and Global? I agree. I went with Global and am making myself stick to it. The bigger problem I have as an investor is thinking I always have to do something to optimize. At this point I just need to pick something and stick to my guns.
A natural human tendency, I think. Or at least you and I are both prone to it, but I know we're not alone. :)

I think there's a lot of wisdom in the saying that "The enemy of a good plan is the search for a 'perfect' plan."

megabad
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Re: CREF Global Equities as 403b VTWSX equivalent?

Post by megabad » Tue Oct 16, 2018 6:49 pm

lassevirensghost wrote:
Mon Oct 15, 2018 8:00 pm
EDIT: Perhaps the real question is how GOOD an equivalent of VTWSX is the CREF Global? If it isn't that good, should I just go with CREF Stock?
I would prefer:
50% iShares S&P500 - .23 ER
50% TIAA-CREF international index - .21 ER

You can thank me later for cutting your expenses in half. Yes, it is not an exact approximation, but it will be very close. Based on PortVis, over a decade I get 11.33% CAGR vs 11.60% with slightly different volatilities.

Topic Author
lassevirensghost
Posts: 96
Joined: Mon May 07, 2018 5:33 am

Re: CREF Global Equities as 403b VTWSX equivalent?

Post by lassevirensghost » Tue Oct 16, 2018 10:01 pm

I was originally in those two when I set things up after taking the job. I moved out only because I wanted a one-stop solution. I put my IRA funds into Total World for the same reason. Felt it was better to not see the difference between US and ex-US performance even if it meant higher cost.
“Groucho, how do you invest your money?” | “All in bonds.” | “But Groucho, they don’t pay much return.” | “They do when you have a lot of em!”

Northern Flicker
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Re: CREF Global Equities as 403b VTWSX equivalent?

Post by Northern Flicker » Tue Oct 16, 2018 10:10 pm

CREF Stock is designed as an all-in-one stock portfolio. It has large, mid, and small-caps, US, developed non-US, and emerging non-US stock. It is a single fund solution for a globally diversified stock portfolio.

CREF Stock has a higher percentage in US stock than the total world index, but it is an excellent fund in its own right. Holding the SP500 and TIAA Intl index is fine, but you won’t get US small or mid cap exposure or emerging market exposure. I’m not sure if you will get developed market small caps either.
Index fund investor since 1987.

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