Principal Financial Group, founded in 1879 and headquartered in Des Moines, Iowa, is a global financial services company providing retirement, asset management, and insurance solutions. The company serves businesses, individuals, and institutional clients worldwide. Principal’s general account investment portfolio is approximately $250 billion, managed through Principal Asset Management.
Investment Strategy
Principal Financial’s general account portfolio is constructed to support the company’s insurance and retirement obligations. The core allocation is in investment-grade fixed income, including corporate bonds, government securities, mortgage-backed securities, and commercial mortgage loans. The company’s investment approach emphasizes diversification, credit quality, and consistent income generation.
Principal Asset Management serves as both the general account manager and a major institutional asset management platform, with total assets under management exceeding $500 billion globally. The platform operates across public and private markets, with particular depth in real estate, where Principal has been a recognized leader for decades.
Private Markets Approach
Principal Financial allocates approximately 11% of its general account to alternative investments. The alternatives portfolio is diversified across real estate, private equity, private credit, and infrastructure.
Real estate is the most established component of Principal’s alternatives allocation. Principal Real Estate Investors, a specialized division, is one of the largest commercial real estate managers in the world. Capabilities span direct property equity investment, commercial mortgage origination, CMBS, and real estate securities. The general account benefits from this institutional real estate platform through direct property ownership, mortgage loans, and diversified real estate strategies across property types and geographies.
Private credit has become an increasingly important allocation, with investments in direct lending, structured credit, and specialty finance. Principal’s credit teams originate and manage private credit investments that offer yield premiums relative to public corporate bonds.
The private equity program includes fund commitments and co-investments across buyout and growth equity strategies. Principal maintains relationships with established GP platforms and focuses on diversification across vintage years, strategies, and sectors.
Infrastructure investments provide the portfolio with long-duration, inflation-linked cash flows from essential assets. Principal’s overall alternatives strategy is designed to enhance risk-adjusted returns while maintaining the conservative risk profile expected of an insurance general account.
Frequently Asked Questions
How does Principal Financial invest in alternative assets?
Principal Financial invests in alternatives through its asset management arm, Principal Asset Management. The alternatives allocation includes private equity, private credit, real estate, and infrastructure. Principal Real Estate Investors is one of the largest real estate managers globally, providing the general account with significant real estate expertise.
What is Principal Asset Management's role?
Principal Asset Management manages the company's general account and serves institutional and individual clients. With over $500 billion in total assets under management, the platform includes specialized capabilities in real estate, private credit, equities, and fixed income across global markets.
What makes Principal Financial distinctive as an LP?
Principal's deep real estate investment heritage, combined with its growing private credit and private equity programs, makes it a well-rounded insurance LP. The company's Des Moines headquarters and Midwestern culture emphasize long-term relationships, prudent risk management, and consistent returns.
