At the end of October, the C Fund was down 2.66% for the month and up only 2.69% for the year. The S Fund was up 3.97% for the year and the I Fund was down 10.53% for the year.
Volatility Led to Big Market Turn
When headlines started screaming good news regarding the possibility of a vaccine for the COVID pandemic, the market went up fast. Here is how fast.
At the close of business on Friday, November 13th, the C Fund is now up 12.69% for the year, the S Fund is up 15.05% for the year and the I Fund is up 1.05% for the year.
It is not unusual for a stock fund that has been lagging to move up quickly. That happened with the I Fund so far this month. The I Fund skyrocketed with an increase of just under 13% in this short time period.
And it was not just one fund that has gone up. With the underlying stock funds, the C Fund went up almost 10% between October 30th and November 13th. The S Fund went up almost 10.2%.
Most Popular TSP Funds
TSP participants only have 3.4% of their assets in the I Fund. This is likely because international stocks have generally lagged behind American stocks. There is also a tendency of U.S. investors to invest most of their money in American stocks.
9.2% of participant assets are in the S Fund. 27.6% of assets are in the C Fund.
The most popular choice for TSP investors is the G Fund. It has 34.2% of assets. The G Fund is up 0.85% so far in 2020. It is also considered the “safest” fund among the Thrift Savings Plan options because this fund has never lost money. It also often lags behind the TSP’s stock funds which can go down. Some investors obviously prefer to accept a smaller return, often less than the rate of inflation, than taking the risk of an investment going down.
21.1% of TSP participants’ assets are in the Lifecycle Funds and 4.5% are in the F Fund.
Multi-Asset Managers for the TSP
The Federal Retirement Thrift Investment Board (FRTIB) has been planning and moving forward for some time to use more than one manager for investing TSP assets. That planning is now being implemented.
A recommendation to the FRTIB was to “diversify organizational risk”. In other words, instead of having one company manage all of the index funds, another company would be added to handle some of the fund investments.
The FRTIB has approved using two index managers for each of the C, S, F and I Funds in the TSP. The two companies that will manage the funds are BlackRock and State Street.
Here is a chart from the TSP displaying the implementation dates for this change and the amount to be handled by State Street.
BlackRock will be considered “Manager A” and will continue to handle the bulk of the investments for the index funds.
|Fund||Target Allocation to |
|Target Date||Approximate Amount |
|C||10%||January 2021||21.8 Bn|
|S||20%||February 2021||14.2 Bn|
|F||20%||March 2021||7.7 Bn|