Many of TIAA-CREF’s variable annuities are broad funds that cover several asset classes. Investors who place money in these accounts must be careful to understand which asset classes are included. After all, if you want a large-cap growth fund, it should be invested in large-cap growth. Otherwise, the integrity of the asset allocation of your portfolio can be compromised. With this in mind, we take an x-ray in this article of the largest of all the variable accounts offered by TIAA-CREF, the CREF Stock Account.
In 1952, TIAA-CREF pioneered the innovation of the first variable annuity – CREF Stock. Since that time, the account has grown into a monster account with over $125 billion in assets. Although Morningstar has classified this account as Large Blend, it is much, much more.
The core of the account includes close to 70% invested in U.S. Equity. However, it is important to understand over 30% of this account is invested in International Equity. Along with both domestic. and international exposure, the account also contains close to 66% large-cap stocks, 27% mid-cap stocks, and 7% small-cap stocks. Given the domestic and international exposure along with the variance in the size of stock capitalization, it does not make sense to hold CREF Stock as a portion of your allocation. It is truly an account that should be used as a core equity holding or not at all.