TSP Stock Funds Continue Strong Performance As More Investors Participate in Lifecycle Funds

The SandP 500 index (the index on which the C fund is based) went up about 13 percent in September and October, the best performance in these months since 1998. Here is a summary of the TSP funds for October and the year-to-date.

Friday, October 29th, marked the 81st anniversary of the Crash of 1929 known as “Black Tuesday,” and was the final trading day of what has been a strong October for stocks. On October 28, 1929, the stock market went down almost 13%. It went down about 12% more on October 29th.

But, in 2010, the S&P 500 index (the index on which the C fund is based) went up 13 percent in September and October, the best performance in those months since 1998. September and October are often not very fruitful for investors as the S&P 500 index has averaged a loss of 1 percent during that period since 1928.

The Dow Jones Industrial Index climbed 3.06% during the month and the S&P 500 rose 3.69% for October, the Dow’s best October since 2006 and the S&P 500’s best return in October since 2003.

This month’s climb has largely come on the opinion of analysts that the Federal Reserve will announce more stimulus and midterm elections will lead to a Republican takeover of the House.

The strong performance gives TSP investors a significant financial boost. The S fund is up 16.70% for the year; the C fund is up 7.84% and the I fund is up 4.91%. The F fund has benefited from the interest in bonds this year and it is up 8.46% for the year. The safest investment, the G fund, is also up for year with a return of 2.42%. 

How Are TSP Fund Investors Reacting?

TSP investors have remained somewhat optimistic about the stock investments.

In September,  a relatively small amount of money was moved out of the G fund while $34 million was put into the S fund. Investors were antsy about the C fund, moving $234 million out of this fund and another $20 million out of the I fund.

Some of this money went into the F fund ($112 million) and the increasingly popular L funds ($113 million). In fact, the total investment in the L funds exceeded $30 billion for the first time in September (at the end of December 2009 the figure was a little less than $26 billion.

The number of participants in the L fund continues to go up. The number of L fund participants was up to 716,566 by the end of September. By comparison, at the end of December 2009, the number of L fund investors was at 647,040. There may be several reasons for this action by TSP investors but, presumably, one major reason is concern about maintaining a diversified portfolio and trying to minimize risk with future retirement funds.

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