How the TIAA General Account is investing for 2025

Time to read: 4 minutes

CIO Emily Wiener talks about portfolio resilience in the face of major policy shifts

TIAA backs its guaranteed payments with the financial strength of its nearly $300 billion General Account, or GA.¹ The GA is specifically built to support the savings growth and lifetime income payments we make to retirement plan participants primarily through TIAA Traditional,² our flagship fixed annuity.

Every few months, for the benefit of consultants and plan sponsors, we pull up with Emilia (Emily) Wiener, chief investment officer for the GA, to talk big ideas. Wiener became the GA’s CIO in 2023 after joining TIAA as head of fixed income for the GA in 2016. She’s spent most of her career managing insurance company investment portfolios.

We caught Emily just before the new year to reflect on trends and themes.

Emily - The Federal Reserve lowered short-term interest rates three times as we approached the end of 2024 and yet, all-in, risk-adjusted fixed income yields for new investments remain attractive—even though credit spreads [the difference between yields on corporate bonds and Treasuries] narrowed dramatically. Attractive yields are good news because, ultimately, they help grow account balances and income for our retirement plan participants and retirees.

We’ve discussed at length what the new administration’s policies may mean for inflation expectations. Additional or higher tariffs on imported goods would likely be passed along to consumers in the form of higher prices. Certain constraints on immigration could be inflationary, too, since a smaller workforce could lead to more labor scarcity and higher wages.

We think long-term when we invest, intending to hold fixed income securities to maturity. But we need to invest new savings contributions and portfolio runoff in the short term, and in 2025 we expect a good deal of volatility in key economic variables. It will be important to pick and choose how we deploy our investment program given the volatility we expect.

Emily - I’ll reiterate that the GA’s portfolio is specifically built around delivering predictable, recurring income. The GA primarily does this through its well-diversified fixed income portfolio, which accounts for around 85% of total invested assets. But the strength and size of our capital base also permit us to allocate around 15% of the portfolio to alternative investments—private equity, real estate equity, and real assets including infrastructure, agriculture, and timber—while supporting our industry-leading credit ratings.³

I often talk about building resilience so that the GA is an “all-weather” portfolio. Around the edges, private fixed income asset classes look appealing right now because they continue to offer diversification and a yield premium due to their relatively illiquid and complex nature. This includes private investment grade credit, private asset-backed securities, credit-tenant loans, and project-finance bonds. Through Churchill Asset Management, our affiliate, we favor private high yield investments [including senior secured middle-market loans and junior debt] over comparable public high yield investments. Private credit deals are often structured with protective covenants that bring investors to the table if the issuer falls out of compliance with prescribed metrics, such as leverage and/or interest coverage ratios. The ability to renegotiate the risk/return tradeoff of investments, should an issuer’s business performance go sideways, helps keep us on a defensive footing.

Also, the GA recently started making new investments in CPACE [Commercial Property Assessed Clean Energy] loans and private high yield infrastructure to add additional diversification and spread advantage to the portfolio.

Emily - As I mentioned, the new administration has indicated an interest in trade and immigration policies that could create tailwinds for inflation and potentially keep rates higher for longer. We’ve seen markets already price in fewer rate cuts in 2025.

We analyzed numerous election scenarios last year and found that we don’t have significant vulnerabilities. U.S. presidential cycles come and go every four years and the GA’s investment horizon extends far beyond these cycles. But broadly speaking, lower corporate taxes and reduced regulation—if they materialize—would generally be viewed as supportive for many fixed income issuers in our portfolio.

I’ll mention that we’ve been getting questions about decarbonization. The new administration is likely to impact the pace of the transition to a low-carbon economy since it may reverse climate-risk-focused regulation and support policies that promote fossil fuel dependency. But we still believe—have always believed—that climate risk presents long-run investment risk that will eventually be reflected in asset pricing. Under this scenario, the performance of a portfolio with lower carbon intensity will deliver more consistent returns with stable-to-improving asset quality.

Over the past few years, we’ve made good progress in reducing the carbon intensity of our invested assets, while acknowledging that our ability to move the portfolio in this direction will likely mirror the pace at which the global economy moves. [Read the 2024 TIAA Climate Report] 

Emily - My family has had a tough year, health-wise. I’m coming to terms with the fact that I cannot personally control everything, including the speed at which someone recovers from an accident or illness. I was talking to a friend about not creating excessive stress for yourself about things we cannot control and what she said really resonated: “If it’s out of your hands, it deserves freedom from your mind, too.”

So, I’m resolved to focus the hell out of what I can control—which is really the core of what I do every day at TIAA—but not to stress out when there are things I truly cannot control in my personal life.