29.17 Percent Return on C Fund in 2013 Through November

Thrift Savings Plan investors have enjoyed excellent returns so far in 2013. The C fund is now up 29.17% for the year and the S fund is up 34.40%. The G fund is up 1.69%.

The bullish stock market continued its run in November. Thrift Savings Plan (TSP) investors in the C fund have now enjoyed a year-to-date gain of 29.17%.

And, more good news, S fund investors have seen a gain of 34.40% in 2013 while the I fund is up 20.32% for the year. In fact, the only fund that is down for the year is the F fund which is off 1.13% so far in 2013.The S&P 500, the index on which the C fund is based, has risen in eight consecutive weeks.

Readers can follow their personal investment returns at TSPDataCenter.com (the free program requires registering and entering data for your TSP purchases in order to track your individual returns in the TSP) and those who like to follow the returns for any of the TSP funds can do so by looking at monthly returns, yearly returns or daily TSP returns.

Bond prices slipped over the past month, largely because of fears that the Federal Reserve may cut back on its $85 billion per month debt-purchase program. As a result, the F fund was off slightly in November and is still down for the year as well. While the G fund return is low, it is not subject to some of the same pressures as the bond market in general as the fund is invested in Treasury bills issued for the TSP.

G fund securities earn a statutory interest rate equal to the average market yield on outstanding marketable U.S. Treasury securities with four or more years to maturity. The advantage of the G fund is that there is very little risk to the amount of money invested. The disadvantage is that when interest rates are low and stock prices go up, the rate of return on the G fund is obviously much lower than that earned on stocks.

Here are the results for all of the TSP funds for November, the year-to-date, and for the past 12 months:

G Fund F Fund C Fund S Fund I Fund
Month 0.18% -0.35% 3.05% 2.49% 0.75%
YTD 1.69% -1.13% 29.17% 34.40% 20.32%
12 Month 1.81% -1.26% 30.34% 38.02% 25.16%
L Income L 2020 L 2030 L 2040 L 2050
Month 0.58% 1.24% 1.54% 1.74% 1.93%
YTD 6.35% 14.59% 18.32% 21.08% 23.75%
12 Month 6.86% 15.96% 20.06% 23.13% 26.14%

TSP Interfund Transfers in October

TSP investors may have been bullishly anticipating a positive stock market as they pulled a considerable amount out of the TSP bond funds in October. During October, $1.173 was pulled out of the G fund, $529 million was pulled from the F fund.  $135 million was also transferred from the C fund. On the other hand, $1.2156 billion was transferred into the S fund, $393 million was moved into the I fund and $227 million into the lifecycle funds.

Average Balances in the TSP

For those in the FERS system, the average TSP balance now stands at $103,996. For CSRS employees, the average balance is now $102,540. For military personnel, the average TSP balance is now $16,489.

Is the Market in a Bubble?

No one knows, of course, if the stock market advances will continue in the near future. As is usually the case, there are arguments for or against more stock market gains. Part of what has taken the market higher is investors who may have gotten out of the stock market after the 2008 drop in stock prices, stayed out of the market and are now starting to invest in stocks again. In other words, these investors are bringing new money into stock investments which drives prices up. Also, the Federal Reserve has kept interest rates artificially low with its debt purchase program. This leads to more conservative investors sometimes investing in stocks in order to obtain a higher rate of return than what is available on bonds because of their low interest rates being paid to investors.

But a number of analysts are expressing concern about the stock market now being overvalued as the current bull market has been with us since 2009.

There are only three bull markets that have lasted longer than the current one. The 1949 bull lasted more than 7 years, the one beginning in 1974 lasted a little over 6 years and the longest bull market in history, starting in 1990, lasted about 9.5 years. The average duration of a bull market is about 3.8 years so the current bull market is already above average but a long way from the longest bull market of more than 9 years.

With a number of analysts worried about a stock market top, others think this is good news for the market as there is not the “irrational exuberance” that often accompanies a new investment bubble and some think that the Federal Reserve will keep on buying debt for now to keep rates low.

For now, those that have been investing in stocks through the TSP have a reason to celebrate. They should be in good financial shape as 2013 is likely to be the fifth year in a row that the TSP’s C fund has gone up which provides a cushion for the inevitable future declines, whenever they may occur.

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