Wizard of Odds – Part II

Some incorrect information about the I Fund in the article “Wizard of Odds” raised a number of questions when it was published earlier this week. The author offers the correct information and some clarification.

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:

Hong KongIreland
New ZealandNorway
SwitzerlandUnited 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).

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.

About the Author

Ann Werts (you might have known her as Ann Vanderslice before her marriage) is the founder of Federal Benefits Made Simple, a financial services firm based on the Denver Federal Center campus. After selling her practice in 2021, she continued to teach classes for federal agencies and meet with employees until her retirement in April 2024. In retirement, she continues to work with agencies and individual federal employees to answer both common and complicated questions relating to federal benefits. You can reach her at ann@ask-ann.com.