TIAA rebrands, adds defined duration to muni strategy – iSectors’ Chuck Self Comments to Fund Action

On July 6, 2018

Rheaa Rao

TIAA plans to tweak its $263.1m municipal bond fund to emphasize a defined duration strategy, according to a filing with the Securities and Exchange Commission on July 2.

The firm will change the name of the TIAA-CREF Tax-Exempt Bond Fund (TIXRX) to the TIAA-CREF 5-15 Year Laddered Tax-Exempt Bond Fund, effective August 1. The new strategy will only invest in tax-exempt bonds with a final maturity between five and 15 years, the filing indicates.

The fund did not previously limit its investing universe to a fixed duration, the prospectus indicates. In this interest rate environment, owning bonds longer than 15 years could be detrimental because interest rates are going up,” Chuck Self, chief investment officer at iSectors, explained.

“The fund is sending a signal to investors that they’re going to keep maturities in the intermediate range, that risk is going to be managed, and that there’ll be no investments in long bonds that could drop precipitously,” he said.

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