Trends in Premium and Asset Allocations by TIAA-CREF Participants: 2005-2011

March 2014

This paper analyzes how workers participating in a retirement plan through the TIAA system managed their investment portfolio risk by examining their premium and asset allocation decisions over the period 2005 to 2011. The results indicate that, on average, participants were well diversified across asset classes. Older participants, those with long tenure in the system, and those with relatively large asset accumulations, tended to customize their portfolios by diversifying across various asset classes, including guaranteed, equity, fixed income, real estate, and balanced funds. Younger participants, those with shorter tenure, and those with relatively low asset accumulations, tended to heavily rely on the balanced fund class for automatic diversification. Within the balanced class, the latter participants made extensive use of lifecycle funds, a type of target date fund that utilizes age-based automatic glide paths for diversifying the underlying mix of equity and fixed-income fund investments.