A Surprising TSP Fund Leading in 2020

November 1, 2020 12:14 PM
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Illustration of a bull and a bear wearing face masks facing head to head overlaid on top of a financial graph and surrounded by COVID-19 coronavirus cells - stock market volatility

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The last lap of the 2020 presidential election campaign is nearing an end. In the midst of this election cycle, the stock market closed out its worst month since March.

The major stock market indexes were all down in October. This is the second consecutive month of stock market declines. After a strong run since stocks declined dramatically in March, stocks peaked in early September but have not done well since then.

Best and Worst TSP Stock Funds in 2020

The C Fund, which is still up 2.69% in 2020 and up 9.62% for the past 12 months, declined 0.66% in March. The best performing Thrift Savings Plan (TSP) stock fund during October was the S Fund. It was up 0.5% in October. It is also the best performing stock fund so far in 2020 (up 3.97%) and for the past twelve months (up 11.02%).

The International Fund (I Fund) is not having a good year. It was down 3.97% in October, it is down 10.53% so far in 2020 and down 6.57% for the past 12 months. That gives the I Fund the distinction of the most poorly performing TSP fund for the month, the year and the past 12-months.

A Surprising TSP Leader

The best performance among all TSP funds so far in 2020 is the normally staid F Fund. With two months remaining in the year, this bond fund is up 6.30% in 2020 despite declining 0.42% in October. The last time the F Fund beat out all other TSP funds in one year was in 2008—a year in which the C Fund went down almost 37% and the G Fund had a return of 3.75%. In 2008, the F Fund had a return of 5.45%.

Why Has the Stock Market Declined?

The most likely reason for the stock market decline is a fear of COVID-19 returning with a record-high number of infections in the United States. Also, another round of “lockdowns” by governments in Europe threatens economic growth. Of course, turmoil during a presidential election year is not unique as the two leading parties often tear into each other in an effort to attract or scare voters into voting for their candidate.

All TSP Returns

Here are the results for all of the Thrift Savings Plan Funds for the month, year-to-date and the past 12 months.

G FundF FundC FundS FundI Fund
Month0.06%-0.42%-2.66%0.50%-3.97%
YTD0.82%6.30%2.69%3.97%-10.53%
12 Month1.13%6.16%9.62%11.02%-6.57%
L IncomeL 2025L 2030L 2035L 2040
Month-0.58%-1.30%-1.61%-1.76%-1.91%
YTD1.01%n/a0.12%n/a-0.21%
12 Month2.48%n/a3.76%n/a4.07%
L 2045L 2050L 2055L 2060L 2065
Month-2.04%-2.17%-2.60%-2.60%-2.60%
YTDn/a-0.56%n/an/an/a
12 Monthn/a4.27%n/an/an/a

You can check out all of the current and the historical monthly returns for each of the TSP funds in the monthly rates section at TSPDataCenter.com. The daily rates and the yearly rates for each fund are also available.

More Volatility Looming

2020 has been a volatile year. There is a promise of more to come.

Most polls predict a win by Democrats and Joe Biden becoming the next president. If this sounds like a familiar trend from 2016, that may be the case again. Donald Trump was predicted by most polls to lose the 2016 election. After the votes were counted, everyone remembers all of these polls were wrong and Donald Trump was inaugurated as president instead of Hillary Clinton.

This time, lawyers are lining up to submit legal challenges. The election is likely to be close and the legal maneuvering will add to the turmoil. We also do not know if the final result will ultimately be determined in a court or by the ballot count.

While the election will be held on November 3rd, we may not know the presidential election results until sometime after that date.

In addition to election turmoil, the COVID pandemic is still alive and well and providing fodder for the Biden campaign. Regardless of who wins, the virus will still be here. While a vaccine appears to be coming in the near future, the impact of this medical advance remains to be seen.

In short, more volatility in stocks is likely in a year that has been full of unpredictable events.

© 2020 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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