2020 has been a lousy year for many for a variety of reasons. The stock market has reflected the turmoil and uncertainty.
Great 3rd Quarter; Lousy September for Stocks
The third quarter of the year was a good one for stocks, but the great quarterly results ended with a lousy September.
September lived up to its reputation for often providing bad news for stock investors. The Dow Jones Industrial Average finished September down 2.3%. The S&P 500 went down 3.9%. These are the largest monthly declines since March. This was the worst-performing September for stocks since 2011.
The C Fund in the Thrift Savings Plan tracks the S&P 500. The return rate for the C Fund in September was -3.8%, roughly the same as the S&P 500 index.
8.9% Return for C Fund in 3rd Quarter
Despite the disappointing returns in September, the stock market still had an excellent third quarter for investors. The C Fund gained 8.9% in value from the end of June through the end of September. The DJIA was up 7.6%, while the S&P 500 was up 8.5%.
For the year-to-date, the F Fund still leads all other funds. The F Fund is up 6.75% so far in 2020. The C Fund has returned 5.5% and the S Fund is at 3.45%. The worst-performing fund so far in 2020 has been the I Fund with a return of -6.83%.
C Fund Top is Performer Over 12 Months
Over the past 12 months, investors in the C Fund and the S Funds have done very well. The C Fund is up 15.05% over the past year and it leads the pack of TSP Funds. The S Fund is in second place and it is up 12.6%. The F Fund has done very well for a bond fund with a positive return of 6.91% in the past 12 months.
As stock market followers will often predict, the G Fund (perceived as the safest of the TSP Funds), did not perform as well as most of the stock funds. It had a return of 1.21% in the past year. Among the underlying TSP Funds, only the I Fund had a lower rate of return with a positive return of 0.79%.
Return Rates for All TSP Funds
| | G Fund | F Fund | C Fund | S Fund | I Fund |
| Month | 0.06% | -0.03% | -3.8% | -3.04% | -2.6% |
| YTD | 0.76% | 6.75% | 5.5% | 3.45% | -6.83% |
| 12 Month | 1.21% | 6.91% | 15.05% | 12.6% | 0.79% |
| | L Income | L 2025 | L 2030 | L 2035 | L 2040 |
| Month | -0.66% | -1.58% | -1.92% | -2.11% | -2.30% |
| YTD | 1.59% | n/a | 1.76% | n/a | 1.73% |
| 12 Month | 3.79% | n/a | 7.22% | n/a | 8.17% |
| | L 2045 | L 2050 | L 2055 | L 2060 | L 2065 |
| Month | -2.46% | -2.63% | -3.20% | -3.20% | -3.20% |
| YTD | n/a | 1.64% | n/a | n/a | n/a |
| 12 Month | n/a | 8.92% | n/a | n/a | n/a |
What Happens In October
October is the most volatile month for stocks. Despite the volatility, October has not treated stock market investors harshly. Over the past 20 years, the Dow Jones Industrial Average has gone up 70% of the time and gained an average of 1.6%.
2020 is an unusual year. Between COVID 19, rioting in the streets as some “protestors” have tried to injure the police, burn down buildings and disrupt the lives of many Americans, and national elections coming in early November, the year has been filled with unpredictable turmoil.
Stock market investors have generally fared well if they did not panic. Some investors have done very well if they bought additional stocks when the market tanked in the spring.
Predicting what will happen in October is difficult. As it appears a vaccine for the pandemic is getting closer, the election is getting closer, and we have adapted to the hyperbole surrounding all of these events, perhaps TSP investors will see a calm October with positive returns that match the average over the past 20 years.
