Stock returns for July are now in for the Thrift Savings Plan (TSP) that is primarily used for future retirement income by federal employees. The immediate fear of what would happen to the stock market after the election in the United Kingdom to leave the European Union is now behind us. We are now free to proceed with worrying about the next major event that could send stocks spiraling down.
We do know that TSP investors pulled $2.1 billion out of these stock funds in June, probably based in part on short term concerns about the British election accompanied by bold headlines predicting the disastrous impact on stock prices if the UK voters decided to leave the EU. So far, those fears have not come to pass and the stock market has moved on and up since that election.
Despite the dire predictions, every TSP fund went up in July and every TSP fund is up for the year-to-date. With one exception (the I fund), all TSP funds are also up for the last 12 months.
The I fund (up 5.07%) had the largest gain in July followed by the S fund with a gain of 5.4%. The C fund was up 3.69%. The popular G fund is was up 0.13% in July and is up 1.06% for the year-to-date.
Conservative investors who may depend on the TSP for their income now or in the near future may be wondering why they did not invest in the Lifecycle Income fund as it is up 2.47% for the year compared to 1.06% for the G fund. The reason is because the L Income fund has about 26% its assets in the TSP stock funds, and about 74% of its assets in the G fund, while the G fund is only invested in government securities. The result is that the L Income fund does better during periods when the stock market is going up. As you can see from these annual results for each TSP fund, the L Income fund does not always finish ahead of the G fund but comes out ahead in most years.
Here are the latest results for all of the TSP funds:
| G Fund | F Fund | C Fund | S Fund | I Fund | |
|---|---|---|---|---|---|
| Month | 0.13% | 0.64% | 3.69% | 5.4% | 5.07% |
| YTD | 1.06% | 6.17% | 7.7% | 8.26% | 1.46% |
| 12 Month | 1.95% | 6.3% | 5.68% | 0.25% | -7.17% |
| L Income | L 2020 | L 2030 | L 2040 | L 2050 | |
|---|---|---|---|---|---|
| Month | 1.0% | 2.01% | 2.85% | 3.31% | 3.74% |
| YTD | 2.47% | 3.67% | 4.64% | 5.13% | 5.48% |
| 12 Month | 2.37% | 1.73% | 1.77% | 1.55% | 1.17% |
The TSP stock funds had their best month since March when the C fund was up 6.79%, the S fund up 8.24% and the I fund was up 6.59%. The I fund has still been a loser for investors over the past 12 months although it is now in the black (up 1.46%) so far in 2016.
What does the future hold? No one knows but, for those interested in historical stock market data, August has been the worst month for blue chip stocks over the past 20 years when they have an average loss of 1.3%. January is the only month that is close, with an average drop of 1.15%.
