The TSP announced this week that changes will be coming soon to the Lifecycle funds. This is the group of funds that follow certain automatic investment patterns by utilizing a mix of the core TSP funds based on an employee’s target retirement date.
As the TSP describes them, the L funds “use professionally determined investment mixes that are tailored to meet investment objectives based on various time horizons. The objective is to strike an optimal balance between the expected risk and return associated with each fund.”
On September 18, the TSP posted the following announcement on its website:
The TSP is planning adjustments to the L Funds in an effort to improve outcomes for participants who invest in them.
Effective in January 2019, we will increase exposure to international stocks (the I Fund) from 30% to 35% in all L Funds. The L Income Fund stock allocation (C, S, and I Funds combined) will increase from 20% to 30% over a period of up to 10 years. The total stock allocation for the L 2030, L 2040, and L 2050 Funds will hold steady for a period of years to facilitate transition to the L 2060 Fund when it is introduced in 2020. Finally, at that time, the L 2060 Fund will begin with a 99% stock allocation.
The big changes, of course, are increasing holdings in the I fund and announcement of the launch of the L 2060 fund to take place in 2020.