TSP Stock Investors Have Reason to Cheer March Returns

The S and I funds turned up again in March and these investors have experienced good returns for the past twelve months as well.

TSP stock fund investors may have been feeling a little down in February. The S and I funds were down 0.98% and 0.27% respectively. The C fund managed a positive return of 0.22%–just ahead of the super-safe and usually lackluster G fund which returned 0.36%.

But those stock fund investors can feel good again. The S fund came roaring back like a lion in March with a monthly return of 3.84%. The I fund was not much behind–finishing the month with a return of 3.33%.

Feel better yet? If not, here is some more good news.

For the past twelve months, those investors with the gumption to put their money into international stocks have seen a return of 24.53%. The S fund returns are even better: 25.26% for the past twelve months.

So, those federal employees and retirees who are hoping to use their TSP investments can thank the little guys in the small companies–most of whom don’t have retirement plans worth speaking of and often no health benefits either. The stocks of America’s small companies have moved along with the international stocks.

Here are the latest results:

Fund C S I F G
12 Month Return 11.71% 25.26% 24.53% 2.31% 4.44%
March Return 1.29% 3.84% 3.33% (0.93%) 0.36%

The March returns for the L funds are:

L2040 1.98%
L2030 1.71%
L2020 1.56%
L2010 1.19%
L Income 0.67%

The best performing stocks so far this year have not been the large companies as many stock analysts were predicting. The small companies are still outperforming their larger bretheren.

The performance of the TSP funds for the rest of the year may well depend on the Federal Reserve. The new Chairman, Ben Bernanke, has not been the best friend for stocks in his short term of office.

In his first meeting as Fed Chairman last week, the Federal Reserve again raised interest rates and signaled more interest rate hikes may follow. A fear of higher interest rates usually has a dampening effect on stocks and, if the Federal Reserve intends to raise rates again, the short term perfomance of the stock market could suffer.

Higher interest rates increase the cost of borrowing and may slow spending by consumers. It can also have a negative impact on corporate profits. Investor psychology is also important. The more the Fed raises rates, the more investors begin to fear a market drop which could occur if rising rates create problems for banks and for the real-estate market.

In other words, as usual, there is no sure way to predict the future of stocks for the short term.

But, without knowing the future, TSP investors can still appreciate the significant rate of return for several of the TSP funds for the past month and the past year.

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