July TSP Returns: Lifecycle Investors Looking Good for Past 12 Months

Here are the results for the TSP for July. A big surprise for some investors: The L funds were the place to be for many as their return rate was higher for the past year than most of the regular TSP funds.

TSP investors who follow the daily rate of return on their TSP accounts may be feeling a little dizzy.

Triple-digit increases in the Dow Jones Industrial Average followed by triple digit daily losses have made the news a few times this past month.

Despite the market volatility, there has not been a huge change over the past month. Here are the returns for the month of July:

Fund C S I F G
12 month return 5.42% 5.35% 24.00% 1.42% 4.84%
July return 0.65% (2.79%) 0.98% 1.32% 0.44%

As you can see, the I fund is the big winner for the past twelve months with a sparking 24% rate of return for investors. Despite the recent volatility, the C and S funds are still doing well for the past year but the falling value of small company stocks has taken a toll. By comparison, at the end of June, the twelve month rate of return for the S fund was 14.43%. (See TSP Funds Show Small Gain in June)

That reflects the loss of 2.79% in the S fund value since July 1st. The S fund also lost 4.36% in May.

And, for that growing list of lifecycle fund investors, here are the results for your funds last month:

Last 12 Months July Return
L2040 9.12% 0.13%
L2030 8.50% 0.20%
L2020 8.15% 0.35%
L2010 7.32% 0.37%
LIncome 5.51% 0.49%

TSP investors may want to look closely at these charts.

Many retirees or federal employees getting close to retirement want to preserve their money and also have a decent income–hopefully with a rate of return that will be ahead of inflation. The G fund has been the "old faithful" standby for many of these investors.

Quickly compare the G fund rate of return for the past twelve months and the month of July with the L Income fund rate of return for these same time periods. Surprised?

The L Income fund provided a greater return and is ahead of the G fund.

For those investors who do not like to make their own investment decisions, check out the other return rates for the various lifecycle funds. Obviously, the I fund had, by far, the best rate of return of any fund over the past twelve months. Very few TSP investors have their full investments in the I fund.

The lowest rate of return for the L funds (excluding the income fund) was 7.32% (the 2010 fund for those who may be retiring relatively soon). Your rate of return from the popular C fund: 5.42%.

In other words, the L funds spread out the investment risk but also took advantage of the run-up in the S and I funds that many investors missed.

Should that influence your future investment decisions?

That choice is up to you. It is, no doubt, one big reason the rush to the Lifecycle funds has exceeded the expectation of the folks who work at the TSP. (See also Lifecycle Funds Make a Model Retirement Program Even Better)

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