C Fund on Top for October Returns

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By on November 1, 2017 in Pay & Benefits with 0 Comments

3D bar chart showing growth trend with '2017' in front of it

Stock Indices Up in October—Largest Monthly Increase Since February

In October, the Dow Jones Industrial Average (Dow or DJIA) was up 4.3%. The S&P 500 gained 2.2%. The C fund in the Thrift Savings Plan (TSP) is based on the S&P 500 index and it returned 2.33%. In October, investors had the largest monthly percentage increase for each index since February. (For the interest of TSP investors, in February 2017, the C fund returned 3.97%.)

The reason for the difference in the indices is largely because the Dow industrials index contains a large number of multinational companies. The economic upswing, combined with a weaker U.S. dollar, has helped companies in the Dow index post quarterly profits exceeding the results in the much broader S&P 500 index.

Large companies with a significant percentage of overseas sales have benefited so far this year from their overseas sales results. According to the Wall Street Journal, S&P 500 companies with more than half of their revenue derived from sales outside of the United States have an earnings growth of 13.6% in the third quarter from the year-earlier period. The earnings growth for domestic companies has been 4.9% for the same time frame.

Based on the overall performance of the Dow as a result of companies with large multinational sales results, it is not surprising that TSP investors in the I fund (International fund) have also done well. The I fund returned 1.54% in October. Moreover, the I fund is up 22.15% for the year-to-date which is the highest YTD return for any of the TSP funds so far in 2017. The C fund is in second place with a YTD return of 16.90%.

Results for Each TSP Fund

Here is a summary of the returns for all of the TSP funds for the month of October, the year-to-date (YTD) and returns for the past 12 months.

G Fund F Fund C Fund S Fund I Fund
Month 0.19% 0.07% 2.33% 1.41% 1.54%
YTD 1.92% 3.44% 16.90% 14.35% 22.15%
12 Months 2.29% 1.17% 23.64% 25.68% 23.84%

 

L Income L 2020 L 2030 L 2040 L 2050
Month 0.54% 0.83% 1.27% 1.46% 1.63%
YTD 5.10% 8.16% 11.87% 13.66% 15.29%
12 Months 6.29% 10.53% 15.44% 17.89% 20.22%

How Will Stocks Perform Now?

No one really knows, of course, how your investments in the TSP will do in the near future.

We do know that in the past six months, the Dow has gained more than 11% and the S&P has risen about 8.0%. From April 30 – October 31, the value of a share in the C fund has gone from $33.08 to $36.09 or about 9%.

We are now entering a time of the year that is usually positive for stock returns. According to Marketwatch, from the months of November and April, the data show positive returns for the S&P 500 77.6% of the time. The index goes up an average of 7% during that time based on data going back to 1950. By comparison, from May and October, the S&P 500 index is positive 63.2% of the time with an average gain of 1.5%.

Of course, the stock market has been on a tear with a long running bull market. There are numerous problems around the world that can blow up, including North Korea’s nuclear weapons program, and there are strong political differences in the U.S. that may impact the market.  We look forward to reporting how the averages work out after the stock market returns are in hand through next April.

We wish TSP investors the best in making your investment decisions!

© 2020 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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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

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