My Optimized TIAA-CREF Portfolio: How It’s Going

At the beginning of 2015 I analyzed my retirement portfolio at TIAA-CREF and set allocations using a portfolio optimizer. It is time to check in on that portfolio to see how it is going…

Note: This is not investment advice. Please see the full disclaimer at the end of this post.

A focused portfolio

Rather than “sprinkle” my holdings across a large number of funds, I chose to focus on a few of the best assets.  Even though I’m only in 9 funds, I’m strongly diversified because each of these funds is broad, most of them with hundreds of individual positions.  After selecting the assets, I used Lucena’s portfolio optimizer to refine the allocations.

You can read all the details of my selection process here.

Symbol	Asset Class	Name	Allocation
QREARX	Special	TIAA Real Estate Account	Max Out
TISPX	US Equity	TIAA-CREF S&P 500 Index Fund	20%
TILIX	US Equity	TIAA-CREF Large-Cap Growth Index Fund	15%
TISEX	US Equity	TIAA-CREF Small-Cap Equity Fund	15%
REREX	International Equity	American Funds EuroPacific Growth Fund	5%
TCIEX	International Equity	TIAA-CREF International Equity Index Fund	5%
TPINX	Bonds	Templeton Global Bond Fund	15%
TIHPX	Bonds	TIAA-CREF High-Yield Fund	15%
TIREX	Real Estate	TIAA-CREF Real Estate Securities Fund	10%

Performance & Benchmark

Here’s how my portfolio has performed over the last 2 and a half years:

Performance of the author’s retirement portfolio (orange) versus the benchmark VBINX (blue).

As a benchmark, I selected Vanguard’s VBINX which is a traditional retirement portfolio composed of 60% equities and 40% bonds.  This is typical of the allocations a financial planner would recommend, so it is a decent comparison. Overall return is 29.5% versus the benchmark’s return of 25.6%. My portfolio beat the benchmark by about 3.9%. Risk adjusted return is slightly better as well.

That was a lot of work for only 4%.  A lesson learned here is that the traditional 60/40 portfolio is pretty good.

Why can’t I do better?

Our accounts at TIAA-CREF are restricted to a list of “approved” assets that are all rather tame. I wish I had more flexibility to invest in individual stocks and ETFs.  Still, I’m happy how we did with the assets available.

What’s next?

As I explained here I’m quite impressed by the TIAA Real Estate Account, and I’ve been squirreling as much as possible into it over the last 3 years. I think the allocation there is large enough now that I’m going to hold off on adding more.  I’ll need to reevaluate allocations to equities and bonds now that interest rates are rising.

Stay tuned, I’ll post an update on my plan here in the next few weeks. If you have questions, please feel free to shoot me an email (tucker@lucenaresearch.com).

Disclosures and Disclaimers

Disclaimer: This information has been prepared by Lucena Research Inc. and is intended for informational purposes only. This information should not be construed as investment, legal and/or tax advice. Additionally, this content is not intended as an offer to sell or a solicitation of any investment product or service.

Please note: Lucena is a technology company and not a certified investment advisor. Do not take the opinions expressed explicitly or implicitly in this communication as investment advice. The opinions expressed are of the author and are based on statistical forecasting based on historical data analysis. Past performance does not guarantee future success. In addition, the assumptions and the historical data based on which an opinion is made could be faulty. All results and analyses expressed are hypothetical and are NOT guaranteed. All Trading involves substantial risk. Leverage Trading has large potential reward but also large potential risk. Never trade with money you cannot afford to lose. If you are neither a registered nor a certified investment professional this information is not intended for you. Please consult a registered or a certified investment advisor before risking any capital.

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