Market Turn: C Fund Zooms Up While the F Fund Goes Down

The stock market rebound in October 2002 is reflected in the results of the C fund. The F fund turned down slightly in response to pressure in the bond market.

As we pointed out in an article several days ago, there is some risk to investors who put money into the TSP’s F fund. (See the link on the side of this article to read that article.)

With the results now in for October from the TSP, that fact is graphically displayed. The F fund lost money for the month as it finished down 0.44%. That isn’t a hugh loss, especially when compared with the common stock fund (the C Fund) over the past three years. But many investors who put money into the F fund didn’t realize they could, in fact, lose money by investing in bonds. Reality bites, sometimes.

On the other hand, as Fedsmith wrote last week, the C fund returned more than 8% to investors in October. Reflecting the surge in stock prices last month, the C fund finished up 8.77%. The fund is still down more than 15% for the past twelve months but investors are certainly hoping their portfolios will continue on the upswing.

On the other hand, investors who cashed out of the C fund (and many private sector investors did the same thing over the past several months) and put their money into bonds probably aren’t happy. The sold stocks at the low end of the market and, just as they put money into bonds, the bond fund went down while the stock market zoomed upward.

Investors in the small company fund and the international stock funds are also happy with their results last month: the s fund was up 3.38 percent and the I fund was up 5.42%.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47