Evidently, I was in Kansas, near Oz, when I wrote Part I of the Wizard of Odds article published earlier this week. Thanks to several readers who caught that the wrong index was used in the discussion on the I Fund. What I meant to say was…
If you’re looking to diversify internationally (known as the I Fund within the TSP), you may want to consider the I Fund based on Morgan Stanley’s Capital International EAFE (Europe, Australasia, Far East) Index. This index covers the equity markets of 22 countries including:
| Australia | Austria |
| Belgium | Denmark |
| Finland | France |
| Germany | Greece |
| Hong Kong | Ireland |
| Israel | Italy |
| Japan | Netherlands |
| New Zealand | Norway |
| Portugal | Singapore |
| Spain | Sweden |
| Switzerland | United Kingdom |
With the European Central Bank copying the U.S.Federal Reserve’s policy and buying the debt of its failing members, there may be issues facing Europe (e.g., Greece, Spain,Portugal, Italy) that are worse than what we’re seeing in the United States. And then there’s China, where they need 7% growth just to sustain their economy (by comparison, we only need about 4% in the U.S.). After an industrial revolution, many Chinese who were working on infrastructure projects in southeast China have been asked to move back to their agricultural roots in western China – at a much lower earning level. Guess who doesn’t want to go? The I Fund has had a YTD return similar to the C and S Funds at 12.67% (again, as of 11/23/12).
One reader mentioned that a friend of his owns the website www.wizardofodds.com, a gambling website that he insists is better than gambling on Wall Street. No, that’s not an endorsement! But since there is no wizard behind the curtain to guide you in your TSP allocation decisions, understanding the basis for each fund, the outlook for the economy, and your own tolerance for risk are still the main considerations for growing and protecting your hard-saved TSP dollars.
