Best June Since 1938: TSP Stock Funds Surge

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By on July 1, 2019 in Pay & Benefits with 0 Comments
Digitized image of a bull running up a rising financial graph depicting a bull market

Rising stock prices pushed the Dow Jones Industrial Average (DJIA) to a 7.2% gain in June. This is the best monthly return for June since 1938. Although, compared to June 1938 when the index gained 24.3%, the 7.2% looks small by comparison.

Stocks moved higher in the second quarter of 2019. The upward movement is probably because there is a perception the Federal Reserve may cut interest rates. The result has been a rally moving the S&P 500 (the index on which the C Fund is based) to record highs.

The S&P 500 is up 17% so far in 2019. This is the best first-half performance since 1997. That extended a bull market for stocks that has lasted more than a decade. The rising market also erased losses that occurred at the end of last year.

18.53% Return for C Fund in 2019

So, after a disappointing month in stocks in May, the stock market came roaring back in June. For the month and for the past 12 months, the C Fund was the highest performing fund. It returned 7.04% in June and is up 10.40% over the past twelve months. So far in 2019, it has brought investors a return of 18.53%—the second highest rate of return among the TSP funds for this time period.

The TSP fund with the best return in 2019 is the S Fund which has brought investors a return of 19.48% so far this year. The fund with the lowest return in 2019 is the G Fund with a year-to-date return of 1.28%

Here is how all of the TSP funds performed last month.

Monthly and 12-Month TSP Returns

 G FundF FundC FundS FundI Fund
Month0.19%1.26%7.04%6.80%5.94%
YTD1.28%6.11%18.53%19.48%14.42%
12 Month2.82%7.96%10.40%2.11%1.53%

L IncomeL 2020L 2030L 2040L 2050
Month1.57%2.04%4.11%4.87%5.52%
YTD4.70%6.08%11.03%12.96%14.60%
12 Month4.08%4.30%5.52%5.86%6.07%

Investor Actions and Reactions

Last month, stocks were down in all of the underlying TSP stock funds. The C Fund was down 6.36%, the S Fund was down 6.99% and the I Fund went down 4.69%.

Perhaps it is a coincidence or perhaps a reaction to the bad news for the month. But, for whatever reason, interfund transfers from the TSP stock funds were significant. TSP investors withdrew more than $1.8 billion from the C Fund, more than $1 billion from the S Fund, and $532 million from the I Fund.

On the other end of the trades, investors added $3.1 billion to the G Fund and transferred $652 million onto the F Fund. As can be seen from the table above, investors who were reacting to the downturn in May may have locked in their losses and stocks rebounded again in June.

TSP Participation Rates Go Up

The participation rate for those under the FERS system is now about 91% for the first time. Active duty members of the Uniformed Services is now over 62%.

How TSP Investors Allocate Their Money

The best performing funds over the past year do not necessarily have the highest investment rates. In fact, the G Fund, often perceived as the safest fund in the TSP line-up, has the lowest rate of return (2.82%) and the highest percentage of investments (33.2%). The C Fund has the second highest rate of return over the past 12 months and it has 27.9% of TSP investor assets.

The F Fund has the third highest rate of return for the past 12 months (7.96%) and has 3.8% of investor assets.

Here is how TSP investors invest their TSP money:

FundDollars (billions)Percentage
G $190.233.2%
F$22.03.8%
C$159.427.9%
S$56.99.9%
I$24.14.2%
L Funds$119.820.9%
Total$572.4100%

© 2019 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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