Connecting flexible strategies, customized solutions, and consistent results

“All our lines of business involve clients trusting us with their
assets in the hope and expectation of strong returns. That's
why having a diversified set of highly excellent investment
capabilities is at the core of everything we do.” James McCaughan, President, Global Asset Management

It was another groundbreaking year for the Principal Financial Group, with investment performance at one of the strongest points in our history.

By diversifying our global investment platform, balancing discipline with a long-term vision for growth, and maintaining our legacy of outcomes-focused strategies, The Principal ended 2014 with a record half a trillion dollars of assets under management, including:

  • 65% of retirement assets managed by Principal Global Investors
  • A record year in unaffiliated assets under management
  • More than 85% of our funds in the top half of Morningstar rankings on a 1-, 3- and 5-year basis

Now, as ever, strong investment management (and the performance to show for it) anchor and enable everything else we do. But don't just take our word. In 2014, The Principal was honored as:

  • A Top Mutual Fund Family for 2014 by Barron's1
  • A Top 10 Manager of Real Estate by Pensions & Investments2
  • The Lipper Fund Award winner for best global real estate fund over the five-year period3
  • A Best Asset Manager in Southeast Asia4 for the fifth year in a row
  • Asset Management Company of the Year for Hong Kong MPF5

Our multi-investment boutique strategy continues to lead the way, connecting individual boutiques with a global distribution platform. This approach fosters growth for all of our boutiques. It empowers our investment managers to remain focused on their asset class expertise. And it enables us to provide a diverse array of customized investment options to meet client needs.

It's because of our proven performance—and our focus on outcomes, not just returns—that people continue to connect with The Principal, trusting us not just with their money, but also with their long-term financial well-being.

Case Study

Principal Real Estate Investors

Connecting employees across the world so they can work together and execute critical business solutions.

At The Principal, our investment solutions expand beyond traditional avenues, empowering investors to gain exposure to a variety of options through a balanced, diversified strategy. And we’ve seen consistently positive performance, year after year.

In 2014, one such alternative investment area saw nearly $4 billion in growth of assets under management (AUM), plus a list of top honors from respected financial authorities such as Lipper and Pensions & Investments magazine.

The investment management group that accomplished it all? The Principal Real Estate Securities boutique.

"Our strong investment performance reflects the skill of our real estate securities investment team, and the growth in our assets under management is a tribute to our global sales and distribution force," says Kelly Rush, Chief Investment Officer, Global Real Estate Securities at The Principal. "We’ve always been very disciplined in following our investment process, which has allowed us to protect the interests of our clients and helped to attract new ones."

The Lipper Fund Award winner for best global
real estate fund over the five-year period

In 2014, that investment discipline helped to sustain strong, reliable performance. Despite widespread anticipation of rising interest rates at the beginning of the year, the Principal Real Estate Securities investment team maintained its discipline in building a broadly diversified portfolio—and it paid off when interest rates declined, surprising nearly all. By resisting the temptation to build a portfolio heavily reliant on one factor, The Principal outperformed its benchmarks and most peers.

This consistent investment discipline is complemented by an equally consistent focus on the future in our sales and distribution strategy, driving strong growth in assets under management for Principal Real Estate Securities in 2014. This legacy of future focus traces back to the mid-’90s, when executives at The Principal recognized an auspicious opportunity. Seeing a growing trend of investors using public securities to gain real estate exposure, The Principal began developing expertise in this emerging area, branching off from an already established and well-respected private real estate organization to develop a U.S.-focused strategy.

And our focus on the future didn’t stop there. In 2007, we launched a global strategy in anticipation of future demand toward global strategies—and continued to recruit real estate talent even in the midst of the last financial crisis. As of 2014, The Principal Public Real Estate Securities boutique has grown to $9.4 billion in assets under management, thanks to a growing team with diverse expertise and a track record of proven performance.

As clients continue to show interest in more exposure to globally diverse markets, The Principal real estate investment group is now focused on preparing to meet those developing demands as they evolve in the years to come.

What makes us confident we’ll get there? The same things that have gotten us this far: a disciplined approach, a keen eye for opportunities that lead to future growth, and an ability to navigate challenging investment markets and deliver consistent results.

"We’re prepared,” Rush says. "We recognize that market conditions will be volatile, and we’re prepared to deal with whatever may come our way. We’re prepared for more success."

Good performance = happy customers


Retained 95% of full service accumulation customers6


Funds in Hong Kong received gold rating from MPF Rating Agency


Largest advisor sold fund family7


of investment options were in the top half of Morningstar ratings on a 1-, 3- and 5-year basis at year end.


Flows in Principal Funds 3x industry average8

1 Principal Funds named the No. 5 fund family based on one-year performance in 2014, Barron's, February 2015

2 Managers ranked by total worldwide real estate assets (net of leverage) as of June 30, 2014: "The Largest Real Estate Managers," Pensions & Investments, October 2014

3 Principal Funds, recognized by Lipper for the Principal Global Real Estate Securities Fund, 2014

4 CIMB-Principal Asset Management, recognized by Alpha Southeast Asia for its 8th Annual Best Financial Institutions Awards (Marquee Awards), June 2014

5 Principal Hong Kong, recognized by The Asset, June 2014

6 During time period of Jan. 1, 2014-Dec. 31, 2014

7 Strategic Insights, December 2014

8 Net Cash Flow as a percentage of beginning of year AUM, Strategic Insight Monthly Highlights, December 2014