TIAA-CREF Seeks Endowment Management

(May 17, 2010) — TIAA-CREF, which oversees more than $400 billion in pensions for teachers and academic researchers, plans to expand into investment management for endowments and foundations, Bloomberg reported.

The push by TIAA-CREF, founded in 1918 by Andrew Carnegie as a pension fund for professors, comprises the Teachers Insurance and Annuity Association of America and the College Retirement Equities Fund. The decision to seek endowment management follows similar moves by Goldman Sachs and the Pacific Investment Management Co. (PIMCO), which are seeking funds to reassess their investments after suffering record losses during the financial crisis.

“It is a natural extension of their franchise in the academic community, to trade off their reputation,” Burt Greenwald, an independent fund consultant based in Philadelphia, said about TIAA-CREF in a telephone interview with the news service. The New York-based firm hired Russell Reynolds Associates, an executive-search firm, to recruit money managers from colleges and foundations.

According to estimates by Casey Quirk & Associates LLC, U.S. institutions will outsource more than $500 billion to outside fund managers by the end of 2012. The majority of outsourcing candidates are smaller-sized firms with assets of $250 million to $750 million, which may lack the funds to hire top-tier managers internally, Casey Quirk & Associates LLC said to Bloomberg.