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April 03, 2000
TIAA-CREF Offers Two Social Investment Products
The pension fund giant breaks all the barriers, providing a screened mutual fund to individual
investors at a fraction of the usual cost.
SocialFunds.com --
Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF), a pension
provider with approximately $288 billion in assets under management, has been making waves in the
financial world since they began offering public mutual funds in 1997. With the introduction of two
social investment products today, TIAA-CREF is positioned to rock the socially responsible
investing industry as well.
 Two new products launched by TIAA-CREF today,
the Social Choice Equity Mutual Fund and the Social Choice Equity Account (a variable annuity),
represent a strong entry into the social investing market. They were part of a flotilla of nine new
investment products launched today, five mutual funds and four variable annuities, bringing
TIAA-CREF's public no-load offerings to a total of seventeen products.
"TIAA-CREF brings
10 years of social investing experience to these investment options, given that its investment
professionals have been managing the CREF Social Choice (pension) Account since its inception in
1990," said Dennis Foley, TIAA-CREF Vice President of investment products. "With more than $4
billion in assets, it is the largest investment option of its kind in the world."
The new
Social Choice Equity Mutual Fund is a no-load, large-cap index fund, using the same social screens
as the Social Choice Account offered to TIAA-CREF participants for ten years. These include
avoidance screens for environmental damage, alcohol, tobacco, weapons, nuclear energy, and
companies that have not adopted the MacBride Principles for fair employment in North Ireland.
But while the Social Choice Account offered to participants has a balanced portfolio, including
40 percent bonds, the new Social Choice Equity Fund offered to the public is 100 percent stocks
and is benchmarked to the S&P 500. The new Social Choice Equity Account, a variable annuity
product, has the same investment objective and benchmark as the new mutual fund.
Perhaps
as significant as its social objectives to some investors, TIAA-CREF's tremendous economies of
scale allows them to offer the Social Choice Equity investment options at very low annual expense
ratios. The Social Choice Equity Mutual Fund has an annual expense ratio of 0.27 percent, well
below the average expense ratio for equity index funds.
"We believe we are satisfying the
tremendous need for a social investment option that is low-cost and has a clearly established,
recognizable benchmark in the S&P 500," said Foley. "Because of the well-defined, absolute
investment screens used in the fund and the account, investors definitely know what type of
companies will not be in their portfolios."
TIAA-CREF has been criticized by some
participants in the Social Choice Account for limiting portfolio management to avoidance, or
negative, screening. A national campaign, Social Choice for Social Change: Campaign for a New
TIAA-CREF, is calling on the fund managers to invest 5-10 percent of the account's assets in
companies that are positive models of social and environmental responsibility.
Although
the Campaign for a New TIAA-CREF has been met with stiff resistance by the management, the move to
offer Social Choice products to a wider audience is a positive sign of TIAA-CREF's commitment to
socially responsible investing. Along with Vanguard's imminent entry into the field in May, the
Social Choice products will go a long way toward mainstreaming the interest in social investment.
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SRI World Group, Inc. All Rights Reserved.
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