TIAA-CREF Short-Term Bond Fund FOR FINANCIAL PROFESSIONAL USE ONLY. NOT FOR PUBLIC DISTRIBUTION.

Transcription

1 TIAA-CREF Short-Term Bond Fund

2 Table of contents 1. Overview pg Investment process pg Performance & statistics pg Appendix pg. 24 Important information The information presented herein is confidential and proprietary to Nuveen, LLC. This material is approved for a private presentation by authorized individuals only and, accordingly, this material is not to be reproduced in whole or in part or used for any purpose except as authorized by Nuveen. This material is to be treated as strictly confidential and not disclosed directly or indirectly to any party other than the recipient. This material is not approved for public use or distribution. TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, or visit nuveen.com. for details. This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy or sell securities, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Financial professionals should independently evaluate the risks associated with products or services and exercise independent judgment with respect to their clients. Before investing, please advise your clients to carefully consider fund investment objectives, risks, charges and expenses. For this and other information that should be read carefully, please request a prospectus or summary prospectus from your Advisor Consultant at or log on to nuveen.com. The investment advisory services, strategies and expertise of TIAA Investments, a division of Nuveen, are provided by Teachers Advisors, LLC and TIAA-CREF Investment Management, LLC. Securities offered through Nuveen Securities, LLC, member FINRA and SIPC. Mutual fund investing involves risk; principal loss is possible. There is no guarantee the Fund s investment objectives will be achieved. Credit risk arises from an issuer s ability to make interest and principal payments when due, as well as the prices of bonds declining when an issuer s credit quality is expected to deteriorate. Interest rate risk occurs when interest rates rise causing bond prices to fall. The Fund s income could decline during periods of falling interest rates. Non-U.S. investments involve risks such as currency fluctuation, political and economic instability, lack of liquidity and differing legal and accounting standards. The issuer of a debt security may be able to repay principal prior to the security s maturity, known as prepayment (call) risk, because of an improvement in its credit quality or falling interest rates. In this event, this principal may have to be reinvested in securities with lower interest rates than the original securities, reducing the potential for income. Investments in below investment grade or high yield securities are subject to liquidity risk and heightened credit risk. These and other risk considerations, such as active management, derivatives, extension, illiquid investments, issuer, and income volatility risks, are described in detail in the Fund s prospectus. All information is as of March 31, 2018 unless otherwise disclosed. 2

3 1. Overview 3

4 Scale as one of the world s largest asset managers Nuveen, the investment manager of TIAA, delivers award-winning investment capabilities that span public and private markets across asset classes. $392B Fixed income $246B Taxable $147B Municipal $209B Alternatives $120B Real estate $31B Real assets $58B Private capital Nuveen offers clients: A legacy of service Alignment as like-minded partners A distinct investment approach $967B AUM 1 $48B Multi-asset $317B Equity 1 As of 31 Mar Nuveen assets under management (AUM) is inclusive of underlying affiliates. Totals may not equal 100% due to rounding. 4

5 Broad investment capabilities, specialist expertise Assets under management $967 BILLION Fixed income $392B Equity $317B Alternatives $209B Core/Core Plus Corporate Credit: Investment Grade High Yield Bank Loans Municipal International Inflation-Linked Emerging Markets Debt Structured Finance ESG U.S. Non-U.S. & Global: Developed International Emerging Markets Global ESG Quantitative Index Real Estate: Direct Real Estate Debt REITs Real Assets: Agribusiness Farmland Timberland Energy Infrastructure Commodities Private Capital: Private Debt Private Equity Credit Opportunities Alternative Equity Impact Investing Multi-asset solutions $48B Target Date Multi-Asset Strategies Liability Driven Investing (LDI) Custom Assets under management as of 31 Mar Nuveen provides innovative investment strategies and portfolio management services through its independent investment affiliates: Nuveen Asset Management, TIAA Investments, Symphony Asset Management, NWQ Investment Management Company, Santa Barbara Asset Management, Winslow Capital Management, AGR Partners, Churchill Asset Management, GreenWood Resources, Gresham Investment Management, TH Real Estate, and Westchester Global Investment Management. 5

6 Investment leadership Significant scale 1 #12 largest fund family out of 720 fund families Investment results 2 #3 largest municipal fund manager among 110 fund families with municipal offerings #6 largest target date fund manager among 41 fund families with target date offerings 63% of funds rated 4 or 5 stars by Morningstar 3 The Thomson Reuters Lipper Large Fund Awards are based on a review of 36 companies 2012, 48 companies 2013 and 2014, 37 companies 2015, 34 companies 2016 and 34 companies 2017 risk-adjusted performance. The Mixed Assets Large Fund Award is based on a review of 39 companies 2015, 36 companies 2016 and 35 companies 2017 risk-adjusted performance. 1 Nuveen, Morningstar Direct as of 31 Mar Represents the total net assets of U.S. open-end funds for the Nuveen Family of Funds and the TIAA-CREF Funds, excluding exchange-traded funds, money market fund and fund of funds. For target date funds, based on U.S. open-end and ETF target date funds. 2 The Lipper Large Fund and the Mixed-Assets Large Fund Awards are given to the group with the lowest average decile ranking of three years Consistent Return for eligible funds over the three-year period with at least five equity, five bond, or three mixed-asset portfolios. Note these awards pertain to mutual funds within the TIAA-CREF group of mutual funds; other funds distributed by Nuveen Securities were not included. From Thomson Reuters Lipper Awards, 2018 Thomson Reuters. All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution, or retransmission of this Content without express written permission is prohibited. Certain funds have fee waivers in effect. Without such waivers ratings could be lower. For current performance, rankings and prospectuses, please visit nuveen.com/mutualfunds. 3 Nuveen, Morningstar Direct as of 31 Mar Based on an asset-weighted approach with all share classes, representing all Nuveen Family of Funds and TIAA-CREF Funds, including fund of funds. Morningstar ratings may vary among share classes and are based on historical risk-adjusted total returns, which are not indicative of future results. 63% of Nuveen and TIAA-CREF funds rated by Morningstar received an Overall Morningstar Rating of 4 or 5 stars; 27% received 5 stars and 36% received 4 stars. See nuveen.com for a complete listing of Morningstar ratings. Past performance is no guarantee of future results. 6

7 TIAA Investments Investment Team organization Brad Finkle President, TIAA Investments Bill Martin Hans Erickson, CFA Tom Franks, CFA Adam Polacek, CFA Head of Global Fixed Income Head of Multi-Asset Investments CIO of Global Equities Head of Client Portfolio Management 21 years of investment experience 14 years with TIAA Investments 29 years of investment experience 22 years with TIAA Investments 20 years of investment experience 16 years with TIAA Investments 22 years of investment experience 18 years with TIAA Investments 7

8 Global Fixed Income organizational structure Bill Huffman Jose Minaya Chief Investment Officer and President Global Investments Co-Heads of Nuveen Equities and Fixed Income Brad Finkle Saira Malik Equities Investment Leader Lisa Black TaxableFixed Income Investment Leader John Miller Municipals Investment Leader Bill Martin Managing Director Global Head of TIAA Investments Fixed Income Portfolio Management Bill Martin Managing Director Head of Fixed Income Portfolio Management Fixed Income Research Anders Persson, CFA Managing Director Head of Fixed Income Research Trading Tim Gigliotti Managing Director Head of Fixed Income Trading Global Derivatives and Quantitative Portfolio Management Jayesh Bhansali, CFA, CAIA Managing Director Head of Derivatives & Quantitative Portfolio Management 21 years of experience 14 years with TIAA Investments 22 years of experience 12 years with TIAA Investments 30 years of experience 7 years with TIAA Investments 30 years of experience 21 years with TIAA Investments 8

9 Resources Portfolio Management team Sector Specialists Portfolio Management team Research Traders Risk analytics John M. Cerra Portfolio Manager 32 years of investment experience John Cerra U.S. Treasuries and Canadian Sovereigns, Agencies, Project Loans, Covered Bonds 32 years of investment experience Richard Cheng Corporates 25 years of investment experience Chris Jeltrup CMBS 11 years of investment experience Joel Levy Municipals 14 years of investment experience Kevin Lorenz, CFA High-Yield Corporates 30 years of investment experience Aashh Parekh, CFA ABS 12 years of investment experience 37 senior analysts 13 traders Barclays Capital POINT Richard Cheng Portfolio Manager 25 years of investment experience Anders Persson, CFA Leveraged Loans 22 years of investment experience Nick Travaglino MBS 20 years of investment experience Anupam Damani, CFA Developed and Emerging Markets Sovereigns (ex Canada) 22 years of investment experience Katherine Renfrew Emerging Markets Corporates and Quasi-Sovereigns 25 years of investment experience 9

10 Philosophy The is a fixed income offering designed to maintain a dollar weighted average maturity of portfolio holdings of three years or less. We seek to provide competitive levels of income with a limited degree of interest-rate risk by incorporating the following tenets in our investment approach: Rigorous cash-flow focused security selection process Decisions make full use of organizational expertise Add value through multiple means Well-timed decisions in the right securities We believe that successful investing requires a clear understanding of each security s cash flow characteristics Focus on issuer s long-term ability to generate cash flow and service debt, while placing less emphasis on short-term price fluctuations Effective portfolio management requires appropriate balance of specialized expertise and broader market perspectives Primary decision-making authority rests with lead portfolio manager with input from sector specialist portfolio managers and in-house research analyst team We believe fixed income markets provide multiple opportunities for excess return successful management exploits such sources within risk-controlled framework Seek to add excess returns primarily through security selection and sector rotation, with secondary contributions from effective yield-curve positioning, duration management, and assessment of structural market dynamics Market technicals and securityspecific considerations can influence attractiveness and timing of prospective investments Focus on issuer/issue liquidity, capital structure placement, and relative value along the issuer s credit curve 10

11 2. Investment Process 11

12 Investment process Extensive and rigorous research seeks to identify undervalued securities Macroeconomic factors assessment Fundamental analysis Short-Term Bond Fund portfolio construction Monitoring Assess macroeconomic factors Growth and inflation outlook Fiscal and monetary policies Evaluate fixed income fundamentals Credit analysis Yield-curve analysis Monitoring Daily meetings with portfolio managers & analysts Price change reports Assessment of new deal and secondary trading activity Analyst internal ratings and surveillance 12

13 Credit research process Industry analysis Competitive landscape: revenue / cost drivers, pricing, barriers to entry, regulation Industry trends: size, growth rate, cyclicality Peer group comparisons: margins, leverage and coverage ratios Quantitative and qualitative analysis Company: strategy, business model, competitive advantage, market position, SWOT analysis Management: industry expertise, experience, track record with creditors Financial performance: historical and projected cash flows, seasonality, sensitivity / stress analyses Credit statistics: leverage and coverage trends Sovereign: Macro (debt sustainability / monetary / growth trends), political risks, and policy framework Structural analysis Position in capital structure: instrument type, corporate structure, asset valuation, recovery analysis Covenants and terms Debt maturity profile and refinancing risk Relative value analysis Compared to sector, country, and market valuation Assess total return potential and overall risk / reward Ongoing monitoring Monitor market conditions and performance Frequent team meetings, periodic portfolio and sector reviews Re-assessment of credit views based on new developments 13

14 Structured research process Analyze collateral and structure Structure: Review deal documents, servicer reports, payment waterfall and loss allocation Collateral: Isolate tails of riskier credit attributes Performance: Evaluate prepayment and loss rates, servicer practices, exogenous factors: modifications, government programs, etc. Develop credit opinion Develop proprietary base case cash flow estimates Stress test: Evaluate cash flows under many scenarios, recession and depression environments Evaluate loss and recovery projections from other models Formulate investment recommendation Current PM Focus: IRR exceeds crediting rate for bearish performance scenarios Relative value: Match credit states to resulting yields and spreads targeting cash flows with tighter spread dispersion Portfolio surveillance Ongoing monitoring combines historical data and forward looking cash flow projections Re-underwrite select subset of securities based on outlier movements in credit attributes Re-underwriting Compare base case at purchase to current outlook Surveillance results Adjust internal credit ratings, make buy / sell / hold recommendation Update underwriting practices 14

15 Risk management The portfolio team runs risk analytics (Barclays Capital POINT system) on a daily basis to assess and adjust Option-adjusted duration Spread duration Convexity Sector allocation Short-Term Bond Fund Targeted Tracking Error (36 months)* Active Duration vs. Benchmark* bps +/-0.5 yr High Yield Exposure 2-5% Emerging Markets Exposure* 4-7% Total Plus Exposure * 5-12% * Represents typical range of exposure does not necessarily represent policy limits 15

16 3. Performance & statistics 16

17 -0.02% -0.20% -0.02% -0.20% 0.24% 0.66% 1.14% 1.39% 1.18% 0.76% 1.56% 2.37% 2.41% 2.89% (Institutional class) Net of fees as of March 31, 2018 * Average annualized returns vs. Bloomberg Barclays U.S. 1-3 Year Government/Credit Bond Index 5% Short-Term Bond Fund (Institutional Class) 0% Bloomberg Barclays U.S. 1-3 Year Government/Credit Bond Index -5% QTD YTD 1-Year 3-Year 5-Year 10-Year Since Inception * The Fund s inception date is March 31, Returns do not reflect the taxes that a shareholder would pay on fund distributions or on redemptions of fund shares. Investment return and principal value will fluctuate so that, when redeemed, shares may be worth more or less than the original cost. The performance presented represents past performance and is not an indicator or guarantee of future results. Performance data for the Fund is presented net of management fees and expenses and includes the reinvestment of dividends through March 31, The net expense ratio for this portfolio is 0.27%. Current performance may be lower or higher than the performance presented herein. For performance current to the most recent month-end and important net expense ratio information, please visit nuveen.com. Please see the Appendix for important notes to this presentation. 17

18 Key benefits Long-tenured management team with investment expertise through various market cycles Team headed by lead manager John Cerra, who brings 32 years investment experience, and co-manager Richard Cheng, with 25 years investment experience Access to broader group of fixed income portfolio managers provides depth of sector-level expertise; supports strategy development and implementation In-house team of credit research analysts provide coverage needed to inform security-level credit decisions Disciplined investment process focused on identifying value across range of sectors Fund maintains a diversified exposure to a range of short-term fixed income securities; seeks to add value through strategic assessment of relative value across sectors and bottom-up security selection Invests on opportunistic basis in out-of-benchmark sectors including MBS, CMBS, ABS, covered bonds and high yield bonds Strategy has successfully navigated through varied market conditions Positioning relative to peers and adherence to relative risk guidelines has led to above-median performance in varied markets* Outperformed benchmark over trailing 3 and 5 year periods ending March 31, 2018 * Over 5-year period ending March 31,

19 As of March 31, 2018 * Portfolio characteristics Maturity breakdown: 0-1 Year 17.02% 1-3 Years 53.18% 3-5 Years 21.32% 5-10 Years 7.73% 10+ Years 0.75% Option-adjusted duration 1.76 Average maturity of portfolio 2.58 Number of holdings 350 * The data shown is provided for informational purposes only. Allocations at the time of investment may be different. 19

20 As of March 31, 2018* Portfolio composition Security type Percent of portfolio U.S. Treasury Securities 24.73% Asset-Backed Securities 23.38% Foreign Government & Corporate Bonds Denominated In U.S. Dollars 20.45% Corporate Bonds 16.68% Commercial Mortgage-Backed Securities 5.91% U.S. Agency Securities 3.78% Bank Loan Obligations 2.51% Municipal Bonds 0.29% Mortgage-Backed Securities 0.09% Short-Term Investments, Other Assets & Liabilities, Net 2.18% Total % * Allocations at the time of investment may be different. All information is provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities shown above. The portfolio is actively managed and holdings may not be current. 20

21 Rolling 3-year total return annualized Source: Morningstar Direct. Past performance is no guarantee of future results. The graphic above depicts the rolling annualized total return of the vs. its respective peer group and relative to its index, the Bloomberg Barclays U.S. Government/Credit 1-3 Year Index over rolling 3-year periods. 21

22 Rolling 3-year standard deviation Source: Morningstar Direct. Past performance is no guarantee of future results. The graphic above depicts the rolling standard deviation of the vs. its respective peer group and relative to its index, the Bloomberg Barclays U.S. Government/Credit 1-3 Year Index over rolling 3-year periods. The standard deviation is a measurement of dispersion of returns of a fund about an average. It depicts how widely the returns varied over a certain period of time. When a fund has a high standard deviation, the predicted range of performance is wide, implying greater volatility. 22

23 Rolling 3-year information ratio Source: Morningstar Direct. Past performance is no guarantee of future results. The graphic above depicts the rolling information ratio of the vs. its respective peer group. The information ratio is a ratio of portfolio returns above the returns of a benchmark -- usually an index -- to the volatility of those returns. The information ratio measures a portfolio manager's ability to generate excess returns relative to a benchmark but also attempts to identify consistency. Results will vary based on the benchmark used and time periods analyzed. 23

24 4. Appendix 24

25 Portfolio management John Cerra Managing Director John Cerra is a fixed income portfolio manager for TIAA Investments. Mr. Cerra is a member of the portfolio management team for several of the organization s fixed income portfolios. Since joining TIAA Investments in 1985, he has held several positions including managing the public asset-backed securities team and U.S. dollar-based derivative investment portfolio. He also served as an investment officer of the public markets structured finance team and bond group. In addition, Mr. Cerra worked as a quantitative fixed income investment analyst. Mr. Cerra holds a B.A. in economics from Fordham University and an M.B.A. in finance from Rutgers University s Graduate School of Management. He is a founding member and Investor representative on Sifma s US Covered Bond Council. Richard Cheng Managing Director Richard Cheng is a managing director and fixed income portfolio manager for TIAA Investments. Mr. Cheng is responsible for investment selection concentrating on the corporate sector. His prior experience at TIAA Investments involves covering Latin America for the Emerging Markets Debt team as well as covering paper/forest products, chemicals, metals and mining, health care, technology, utilities and gas pipelines for the Investment-Grade Credit team. He joined TIAA Investments in Mr. Cheng has 25 years of investment experience, including various roles at Chase Manhattan Bank as part of its management development program. Mr. Cheng holds a B.S. in finance and accounting and an M.B.A. in finance and international business from New York University s Stern School of Business. 25

26 Notes 1. Performance data for the fund is presented net of investment management fees and expenses and includes the reinvestment of dividends through March 31, Current performance may be lower or higher than the performance presented herein. No representation is made that the fund or any account will or is likely to achieve its objectives or that any investor will or is likely to achieve results comparable to those shown or will make any profit at all or will be able to avoid incurring substantial losses. 1-5 Year Government/Credit Bond Index to the Bloomberg Barclays U.S. 1-3 Year Government/Credit Bond Index. 2. The annual expense charge for these funds reflects a reimbursement of various expenses by the Funds advisor. Without this reimbursement, the Funds expenses would be higher. 3. The TIAA-CREF Funds offer five classes of shares. The performance returns included in this material are those of the Institutional of shares. 4. The Fund is benchmarked to an appropriate market index. The benchmark does not reflect any fees, brokerage commissions or other expenses but does reflect the reinvestment of dividends. The benchmark is unmanaged and does not reflect the payment of advisory fees and other expenses associated with investing in a mutual fund, commingled fund or separate account. Effective January 1, 2014, the Fund s benchmark index changed from the Bloomberg Barclays 26

27 INAD-Q-12/ Learn More At nuveen.com or call CFA and Chartered Financial Analyst are registered trademarks owned by CFA institute. The investment advisory services, strategies and expertise of TIAA Investments, a division of Nuveen, are provided by Teachers Advisors, LLC and TIAA-CREF Investment Management, LLC. Securities offered through Nuveen Securities, LLC, member FINRA and SIPC. This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy or sell securities, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Financial professionals should independently evaluate the risks associated with products or services and exercise independent judgment with respect to their clients. 27