Market Sinks on July 31: All TSP Stock Funds Down in July

The stock market dropped in July ending a five month winning streak for the TSP C fund. For the year-to-date and the past twelve months, all of the TSP funds are showing a positive return.

The favorable returns in the Thrift Savings Plan (TSP) came to an abrupt end in July. While it is not unusual, the abrupt turnaround in stock prices in one day (317 point decline in the Dow Jones Industrial Average on July 31) may have taken some investors by surprise.

As usual, a longer term perspective is in order. All of the TSP funds were down in July with the exception of the G fund which increased 0.19% in July. Here are the results:

July 2014
G Fund F Fund C Fund S Fund I Fund
Month 0.19% -0.19% -1.37% -4.38% -1.95%
YTD 1.36% 4.17% 5.71% 1.56% 3.01%
12 Month 2.31% 4.67% 17.03% 13.57% 15.45%
L Income L 2020 L 2030 L 2040 L 2050
Month -0.26% -0.97% -1.34% -1.63% -1.86%
YTD 2.19% 3.12% 3.50% 3.72% 3.92%
12 Month 5.19% 9.64% 11.57% 12.91% 14.24%

The S fund suffered the biggest losses for the month (-4.38%) but it is still up 1.56% for the year and ahead 13.57% for the past twelve months. In fact, all of the TSP funds are still up for the year-to-date (YTD) and for the past twelve months. For the past twelve months, the fund with the largest gains is the C fund which is up 17.03%. To see historical TSP returns data, be sure to check out

As recently as last week, stock prices were setting records despite fighting in the Middle East and the Ukraine, worries about the European economies and the strong possibility of the Federal Reserve finally cutting back on its aggressive bond buying program.

So what finally broke the streak of monthly gains? Events that were not surprising came together to spook many investors. Argentina defaulted on its debt, continuing worries about political and military actions in the Middle East and the Ukraine, more aggressive action by Russia and the impact of sanctions on Europe, and a positive report on the number of new jobs (even part-time jobs) raising the possibility of the Federal Reserve raising rates sooner than expected.

Last week, the Commerce Department reported that the nation’s second quarter output of goods and services climbed at a 3.95% annualized rate (net of inflation). News reports frequently rounded the number up to 4% and made it sound like a very significant number.

Probably more significance is being attached to this report than is warranted. The latest GDP report is only a preliminary estimate and is subject to revision. Also, a second-quarter rebound was virtually assured after the low first quarter report. Over, for the first two quarters, there is an annualized growth rate of 0.9% for the first half of 2014. Since the U.S. economy normally grows 2%–3% a year in real terms, an annual growth rate of less than 1% so far in 2014 does not sound like a huge economic recovery is well underway.

As a result of these concerns, many investors (or traders) started taking profits in anticipation of a stock market drop.

To the extent that concerns about rapid inflation from a fast-growing economy played a role in the stock market drop, these concerns may prove to be short-lived. The unemployment rate is still more than 12% when counting people who are looking for work, those who theoretically want to work but have given up, and those who want to work full-time but only have a part-time job. In other words, there is still considerable slack in the American labor force.

Latest TSP Data

The average balance for FERS employees as of June 2014 is $112,790 and the average Roth account for FERS employees is $4,888. For CSRS employees, the average balance is $110,676 and the average Roth account for CSRS folks is $7,957. For military personnel, the average balance is $17,971 and $2,708 in Roth accounts.

The number and amount in Roth accounts for the TSP is continuing to increase. The total in Roth accounts is now over $1.5 billion and the balance is the TSP plan is almost $418 billion.

There are now more than 4.6 million TSP participants.

In June, TSP investors moved about $676 million out of the G fund and $75 million moved out of the I fund. $350 million was transferred into the C fund and $347 million was transferred into the L funds. Another $56 million was transferred into the S fund.

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