The stock market fell in January, went up in February and muddled along in March. The result, after the first quarter, is that the roller coaster ride left Thrift Savings Plan investors ahead for the year despite muted March returns.
That is not terrible news. We have been in the midst of a bull market in stocks for several years so a quarter where stocks do not move higher or lower is not a surprise–and may be a relief for some who were concerned about the market undergoing a major correction.
We are now in April, the best month of the year for American stocks. The S&P 500 (the index used by the C fund) has averaged a 1.7% gain in April over the past 40 years, the best-performing month of the year, according to the Wall Street Journal. That may provide incentive to hope for a strong performance again this year but, as always, the track record does not always follow the same path. World events (think “Ukraine”, “Iran”, and Federal Reserve) have away of following their own course without regard to the long term history.
Here is a quick summary of how all the TSP funds performed in March, how they have done for the year-to-date and how they have done over the past twelve months:
| G Fund | F Fund | C Fund | S Fund | I Fund | |
| Month | 0.19% | -0.15% | 0.85% | -0.69% | -0.57% |
| YTD | 0.58% | 2.06% | 1.83% | 2.70% | 0.75% |
| 12 Month | 2.09% | 0.33% | 21.93% | 25.64% | 17.94% |
| L Income | L 2020 | L 2030 | L 2040 | L 2050 | |
| Month | 0.19% | 0.17% | 0.14% | 0.12% | 0.09% |
| YTD | 0.92% | 1.29% | 1.48% | 1.62% | 1.70% |
| 12 Month | 5.72% | 11.93% | 14.73% | 16.78% | 18.76% |
February 2014 Interfund Transfers
For investors who may have been expecting a significant decline in the stock market in March, they were disappointed as the C fund finished with a small gain despite the ups and downs and uncertainty in political and diplomatic circles over Russia’s actions in Crimea. All of the lifecycle funds had a positive return and there was a decline in the S and I stock funds and in the F bond fund.
In one of the unpredictable turns in the stock market, the two biggest positive days for the stock market during March (based on the Dow Jones industrial average) were on the Tuesday after Russia invaded Crimea, and on the Monday the day after the Crimeans voted to secede from Ukraine.
In February, $197 million was transferred from the G fund and $15 million was withdrawn from the F fund. $382 million was withdrawn from the C fund and $166 million was transferred from the I fund. The big winners were the S fund with interfund transfers of $320 million going into the fund and $441 billion transferred into the lifecycle funds.
Company Earnings
The profits (or lack thereof) plays a big role in stock prices. First quarter earnings will be coming out very soon and, among the S&P 500, many companies have already issued profit warnings in near record numbers. According to the Wall Street Journal, about 93 companies have warned that profits will fall short of what has been forecasted.
As a cautionary note, and a signal for the need for diversification in your investments, U.S. economic growth is still very slow and the bull market rally has been significant, many analysts warn that there will have to be some good economic news to keep stock prices moving up. That could happen in the form of a strong increase in private sector job growth or stronger than expected earnings growth.
Predicting the short-term future for stock prices is speculation. TSP investors can feel more at ease with the positive returns for the first quarter of the year and the excellent returns in their stock market investments over the past five years. (Check out TSP fund annual returns at TSPDataCenter.com.)
