The S&P 500 index (the fund on which the TSP’s C Fund is based) ended July with a 5.5% gain for the month. This major stock index has been up for four straight months. Its performance over the past four months is its largest four-month percentage gain since December 1998.
C Fund Now Up in 2020
The C Fund actually provided a slightly better return for Thrift Savings Plan (TSP) investors than the S&P 500 Index which gained 5.5% in July. The C Fund gained 5.6% in July. The C Fund is now ahead for the year-to-date as well and is now 2.31% ahead in 2020 and is up 11.86% over the past twelve months.
The S Fund had a better return in July than the C Fund. The S Fund was up 5.71% for the month. Although it was ahead in July, the S Fund is significantly lagging the C Fund for the year-to-date (-0.47%) and for the past 12 months with a 4.88% gain.
The only fund with a negative return over the past 12 months is the I Fund. It has a negative return of -0.53% over the past 12 months.
The most widely held fund among TSP investors is the G Fund. It is widely considered to be the safest fund as it never loses money. It also gains much less than the stock funds when stocks are going up.
At the end of June, 34.1% of TSP investor money was allocated to the G Fund. The 2nd most popular fund was the C Fund with 28% of investor’s money allocated to this popular stock fund.
So far in 2020, the G Fund has a return of 0.65% and over the past twelve months it is up 1.42%. The reason the G Fund is so popular for risk averse investors can be seen in the March returns. In March, the G Fund had a return of 0.11%. Every other fund in the TSP line-up had a negative return. (Check out the historical daily, annual and monthly returns at TSPDataCenter.com.)
While the G Fund often finishes with a lower annual return than the stock funds, there are years when the G Fund has a positive return and the stock funds are down. In 2018, for example, the G Fund had a return of 2.91% while the C Fund went down -9.26% for the year. In 2019 though, the G Fund had a return of 2.24% while the C Fund was up 31.45%.
So, the G Fund is the “safest” TSP fund, but that safety often comes with a cost in the form of a lower rate of return which can be significant over time.
First Month of Returns for New Funds
July is the first month of existence for the new Lifecycle Funds. As displayed in the chart below, new investors in these funds are probably pleased.
Three of the funds showed returns of 4.13%. The L 2050 Fund had a smaller positive return of 3.8% and the L 2045 Fund finished the month with a return of 3.32%.
Year-to-date and 12-month returns for the new funds are not relevant as these funds only have one month of complete returns.
Returns for All TSP Funds
Here are the results for all TSP Funds, including the new TSP funds, for July, the year-to-date and the past 12 months:
|G Fund||F Fund||C Fund||S Fund||I Fund|
|L Income||L 2025||L 3030||L 2035||L 2040|
|L 2045||L 2050||L 2055||L 2060||L 2065|
What Will Happen in August?
Stock market investors may be understandably nervous. Institutional investors are now largely on the sidelines in the stock market according to the Wall Street Journal. They are nervous about what Congress will do with any stimulus legislation, the upcoming national elections, and the impact of the COVID-19 virus on the economy and company earnings.
No one knows, of course, how events will proceed. With the deepest recession in American history now upon us as a result of the shutdown for significant segments of our economy, the loss of jobs for many Americans, huge federal spending deficits, uncertainty about an economic rebound and news about the virus are likely to combine to make August a very volatile month for stocks.