2020 has not been good to stock market investors so far but there was a big turnaround in stock prices in April. As a result, the overall results for the year are better than they were at this time last month.
Generally, the stock funds are still showing a loss so far in 2020 while the bond funds are providing a positive return. Stock funds will usually provide better returns when prices are going up but will drop faster in a declining market.
The Dow Jones Industrial Average (DJIA) gained 11.1% in April, while the S&P 500 index (the index on which the TSP’s C Fund is based) went up 13% for the month. These are the biggest monthly gains for these stock market trackers since 1987.
Best TSP Performance in April 2020
The S Fund finished up April with a gain of almost 16%. That is a good return but, to put it in perspective, the TSP’s small company fund is still down almost 17% for the year and down more than 11% over the past 12 months.
The C Fund, which is the most popular stock fund in the Thrift Savings Plan, was up almost 13% in April. This fund is also still down more than 9% so far in 2020. It does have a positive return over the past 12 months though with a return of 0.77%.
Best TSP Fund Return in 2020 and Best 12 Month Return
The F Fund was up 1.78% in April. By far, the F Fund has the best return over the past 12 months (10.76%) and also for the year-to-date (4.94%). That is a great return in a year that has been disappointing for stock market investors.
The biggest TSP fund is the G Fund. It is perceived as the safest fund in the TSP’s array of funds as it never loses money. It also provides one of the lowest returns over time but safety is obviously a very big factor for many investors.
In April, the G Fund had a return of 0.07%. It is up 1.83% over the past 12 months and up 0.47% so far in 2020—a significant benefit in a year when the biggest TSP stock fund has had a loss of -9.35% in 2020.
April 2020 TSP Performance
Here are the results for each fund in the Thrift Savings Plan (TSP). The rates of return are available for all TSP funds by day, month and year at TSPDataCenter.com.
International Politics and the TSP
The TSP does not often make headlines in national business news. This month is different.
The TSP is planning to transfer about $50 billion of the I Fund to a different stock market index which includes emerging markets. While that may be a good move for investors, this move would include putting more money from federal employees and military personnel into Chinese companies.
Some former military commanders have objected as some of the TSP money in the I Fund would be invested in Chinese companies including “weapons manufacturers, U.S.-sanctioned entities and other malevolent enterprises of the Chinese Communist Party.”
As noted in White House Plans to Block TSP from Expanding China Investments, the political pressure on the TSP is building fast to prevent this change from occurring.
To add to the political intrigue, all of the members of the Federal Retirement Thrift Investment Board (FRTIB) are appointees from the Obama Administration. So far, there is no indication the Board is changing its plans. Legislation pending in Congress or an Executive Order from President Trump could change these plans before implementation. TSP investors will have to wait and see how this situation transpires.
What Will Happen to Stock Prices Next?
The stock market has been very volatile in 2020. There is little likelihood this volatility will change.
Progress in re-opening companies in states throughout the country may have a positive impact unless there is a resurgence of the COVID-19 virus. Positive developments or setbacks in a vaccine or other medical improvements to step the spread are also likely to have an impact on stock prices.
Staying up with hourly headlines is unlikely to improve anyone’s mental health and watching your TSP investments go up and down on a daily basis while sitting at home is likely to lead to bad investment decisions.
Our advice: Have a plan and stick with it and make better use of your time at home!
There can be, and often there is, a period of increasing stock prices during a longer-term bear market (when prices drop significantly). These fluctuations can trap and create more financial losses when investors try to guess what will happen next with stock prices–and guess wrong. A word to the wise: Be very careful if you are tempted to try and time the market in this way.
In any event, we wish all readers the best of luck in funding their future or current retirement through their Thrift Savings Plan investment.