Is the TSP Still Infected with the Coronavirus?

All of the TSP stock funds had positive returns in May with one fund gaining 8.79% for the month.

April and May have provided favorable returns for investors in the Thrift Investment Plan (TSP).

After a dismal month for investors in March, the S&P 500 (the stock index on which the C Fund is based) went up more than 4% in May. This follows the April rally in the stock market when major stock market indexes posted their best monthly percentage gains since 1987.

Gains for TSP Stock Funds

Astute TSP investors will notice the C Fund was up 4.76% in May. This recent gain follows a gain of 12.8% in April. That significant gain actually is considerably less than the S Fund though which was up 8.79% in May. The I Fund also went up 4.5% in May.

Note, however, that the drop in the market earlier in the year is still having a big impact on the returns of the TSP stock funds for the year-to-date. All of the TSP stock funds and all of the Lifecycle funds still show a negative return in 2020.

But, the good news for investors is that the 12-month returns are very good for most of the stock funds. The only stock fund that is down over the past twelve months is the I Fund which has a negative return of 2.52% for the longer time period.

All of the Lifecycle funds are also showing a positive return over the past 12 month period.

In other words, TSP investors that did not panic when the market fell earlier in 2020 are still coming out ahead with their investments over the past twelve months.

The reason for the gains in the stock market last month is most likely optimism over the economy now that the country is starting to re-open after shutting down earlier in the year as a result of fear and uncertainty about COVID-19.

Returns for All TSP Funds

Here are the results for all TSP Funds for May, the year-to-date and the past 12 months:

G FundF FundC FundS FundI Fund
12 Month1.67%9.33%12.74%3.56%-2.52%

L IncomeL 2020L 2030L 2040L 2050
12 Month3.38%3.65%5.27%5.71%5.98%

We do not, of course, know what will happen in the remaining months of 2020. An optimistic view is that the market will rebound as business opens and the unemployment rate drops.

We do not know how many jobs will be lost as a result of bankruptcies that are now starting to show up because business concerns were forced to close. Many smaller restaurants and other businesses will not open again and some chain stores are also going into bankruptcy.

It is also possible that the growing rift with China over the Chinese government clamping down on the freedom enjoyed by residents of Hong Kong, the lack of transparency over the COVID-19 virus and growing Chinese military activity in the South China Sea and around Taiwan will have an impact on stock markets.

And, of course, we do not know what impact the riots now going on in cities around the country will have on politics including the national elections coming up in November or the impact this will have on stock investments in the coming months.

At the moment, the stimulus payments and the optimism and relief over the ending of the shutdown in many states has had the greatest impact on stock prices. International developments and the relative ability of the economy to recover may dampen stock prices later in the year.

For now, TSP participants can enjoy looking at the increase in value of their Thrift Savings Plan accounts for May and the increase in value over the last 12-months.

We wish all of our readers the best of luck in returning to work for those who have been working at home as well as the best of luck in their TSP investment results.

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