A MarketWatch news report said that the company is suggesting the fee hikes for its actively managed institutional mutual funds. The proposed changes primarily affect funds that TIAA-CREF manages for state 529 college savings plans and institutional trust clients, according to the company. TIAA-CREF made the proposal in a Securities and Exchange Commission filing.
The institutional funds represent about $6 billion of the firm’s $343 billion under management, TIAA-CREF spokeswoman Stephanie Cohen Glass told MarketWatch.
Pension investments that employees of universities, colleges, research institutions and nonprofits make through the College Retirement Equities Fund (CREF) and the Teachers Insurance and Annuity Association of America (TIAA) are not affected, she added.
“This action is being taken to align what the actual costs are related to these funds,” Cohen Glass said. “We will remain a low-cost provider, and [costs] are relatively low in comparison to the industry even if this new fee structure is adopted.” .
TIAA-CREF said that if the proposal is approved in a vote scheduled for August 31, the firm would ask for shareholder approval of the merger of the institutional funds with its traditional retail products. The funds have two distinct share classes, one for institutional clients and one for retail investors, which would be hit with different fee increases under the plan, according to MarketWatch.
For example, the expense ratio would rise to 0.55% from 0.15% for institutional-class shareholders of the TIAA-CREF Institutional Small-Cap Equity Fund, according to the news report.