TSP Stock Prices Surge in 3rd Quarter

TSP investors are enjoying a good year for stock market returns. Here are the TSP funds that have the highest returns for the month and the year.

American Stocks Surging

American stocks are trading at their highest premiums to international stock shares in years. This premium presumably reflects the belief by investors that the U.S. economy will keep growing more than stock shares around the world.

After a slower start in the first half of the year, the S&P 500 moved ahead 7.2% in the third quarter. This is the biggest gain since the end of 2013. Note from the table below that the C fund is up 10.54% so far in 2018. At the end of June, it was up 2.63% for the year-to-date.

The surge in U.S. stock prices also means that domestic stock shares are more expensive compared to major indices outside of our country. No doubt, this will leave some analysts concerned domestic stocks could fall back later this year to bring U.S. stocks more in line with foreign company share prices. TSP investors who are not invested in the I fund may want to check out the monthly returns for TSP fund in the table below.

Tax Package Impacting Profits and Stock Prices

Market analysts say that the economic growth is largely due to the tax package that passed in Congress last year. The changes were largely unpopular in the press when it passed.

The changes included a cut in the corporate tax rate. This change had a positive impact on company profits through the first two quarters of the year. Analysts expect third-quarter earnings to be strong as well.

U.S. tax revenue is also setting records. For fiscal year 2018, tax revenue is up $50.5 billion compared with the same months in the previous year. Tax revenue set a record high level for this five-month span.

The fourth quarter is starting off with a surprise in that there appears to be an agreement reached on an American and Canadian trade deal. The last-minute deal was reached Sunday night and it revises the North American Free Trade Agreement (NAFTA) that has been in effect for about 25 years. The deal will remove the uncertainty over trade between North American countries.

The agreement, which is still pending final approval, will allow Canada to join the agreement reached last August between the U.S. and Mexico. It is likely to have a favorable impact on stock prices and profit for American companies.

TSP Results for September

The TSP fund with the best return for the month was the I fund with a return of 0.91%. For the year to date, the I fund is still down with a negative return of -1.06%. The C fund has the highest rate of return for the past 12 months with a return of 17.88%.

The return of the I fund is not a big surprise in that it had a negative return for five months in 2018. It is not unusual for a fund that has been down to bounce back in succeeding months and that has happened with the I fund in September.

The fund with the lowest monthly return was the S fund at -1.76%. The S fund still has the highest rate of return for the year-to-date at 10.85%. For the past 12 months, investors in this fund will still be happy as they have had a return of 16.22%—the second highest return among TSP funds.

September 2018 Monthly Returns

Here are the latest performance data for all of the TSP funds.

For more historical information about the annual rate of return for each fund, visit TSPDataCenter.com. The rate of return for each fund by month for each year is also available at TSPDataCenter.com.

G Fund F Fund C Fund S Fund I Fund
Month 0.24% -0.62% 0.57% -1.76% 0.91%
YTD 2.12% -1.48% 10.54% 10.85% -1.06%
12 Month 2.72% -1.05% 17.88% 16.22% 3.15%


L Income L 2020 L 2030 L 2040 L 2050
Month 0.21% 0.22% 0.23% 0.22% 0.21%
YTD 2.96% 3.52% 4.96% 5.50% 5.99%
12 Month 4.59% 6.02% 8.81% 9.96% 11.01%

Average Balance for TSP Participants

Federal employees in the Civil Service Retirement System (CSRS) have the highest average balance in the Thrift Savings Plan. The average balance is up across the board as a result of continuing favorable stock market returns. As of the end of August 2018, here is how TSP investors fare based on their retirement system status:

Total Participants Average Balance # of Roth Participants Average Roth Balance
FERS 3,339,518 $145,300 501,374 $13,099
CSRS 320,640 $150,881 9,937 $20,104
Uniformed Services 1,397,055 $25,622 544,991 $8,013

Should Investors Fear Stock Market Returns in October?

For both the Dow and the S&P indices, October is the best month of the year when there is a midterm election. On the other hand, October is often the most volatile month of the year.

The above-average volatility of October has not resulted in below-average returns. When ranked according to average monthly returns, October is 8th. The worst month for average performance in the stock market is September but, as we now know, September 2018 was a good month for stock investors.

Investors would like to see the stock market continue to go up. That does not happen in perpetuity, of course, and we do not know when a downturn will occur. As we are seeing this year, statistical averages may not mean much in one particular year.

For those who are particularly keen on politics and harbor strong political beliefs, it may be wise to push aside political philosophy when it comes to investing. While many readers may like or dislike President Trump, the stock market does not always pay attention to surveys or political popularity. So far in 2018, TSP investors who are invested in the TSP’s stock funds are doing very well.

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