TSP: Worst Drop in Core Stock Funds Since March 2020

The TSP core stock funds all went down in September. It was the largest decline since March 2020. TSP stock funds’ returns are still up in 2021. Here is a summary.

In September, the stock market was down and the Thrift Savings Plan (TSP) stock funds reflected this decline. The C Fund, the most widely held fund in the TSP, lost 4.65%. This is the worst-performing month for the C Fund since March 2020 when the C Fund lost 12.40%. At the end of August, 31.9% of investors’ funds were in the C Fund.

Of course, the losses were not limited to the C Fund. In September, each of the core stock funds in the TSP was also down. The S Fund went down 4.0%, and the I Fund went down 2.81%.

The reason for the dramatic drop in stocks in March 2020 was the COVID pandemic.

This time around, the reasons for the stock market decline were different. Stock investors are concerned about a variety of issues. These include rising inflation, the debt ceiling impasse, the amount of spending that may pass Congressional review, and concerns that American economic growth is slowing as the nation recovers from the pandemic. Americans are also seeing supply shortages in stores on a variety of items. Shortages are due to a combination of supply-chain problems and a shortage of people applying for vacancies in American businesses.

And, while not a direct economic issue, the messy American withdrawal from Afghanistan has not been an uplifting event with concerns about a variety of surrounding issues over how this withdrawal will impact future American security.

Despite Monthly Decline, TSP Returns Up in 2021

Despite the falling stock market in September, the year-to-date TSP returns are still very good. The C Fund is up 15.90% so far in 2021. The S Fund is close behind with a return of 11.66% this year and the I Fund is up 8.56% for the year.

The 12-month returns are even better with the C Fund up 29.98%, the S Fund up 42.32% and the I Fund up 26.04%.

TSP Returns for September, 12 Month Returns and Year-to-Date Returns

Here are the returns for all of the TSP Funds for September, the past 12 months, and the year to date (YTD):

G FundF FundC FundS FundI Fund
Month0.11%-0.86%-4.65%-4.00%-2.81%
12 Month1.20%-0.71%29.98%42.32%26.04%
YTD0.99%-1.40%15.90%11.66%8.56%
L IncomeL 2025L 2030L 2035L 2040
Month-0.87%-1.78%-2.37%-2.61%-2.85%
12 Month7.15%14.45%18.00%19.75%21.54%
YTD3.52%6.40%7.92%8.58%9.26%
L 2045L 2050L 2055L 2060L 2065
Month-3.05%-3.25%-3.87%-3.87%-3.87%
12 Month23.11%24.70%30.36%30.36%30.36%
YTD9.83%10.41%12.65%12.65%12.65%

TSP Facts

The Thrift Savings Plan now has a balance of more than $794 billion dollars. That is up from more than $773 billion in June and over $762 billion in May.

The TSP now has 6,402,933 participants. The largest number of participants are under the FERS retirement system (3,724,636). The average balance in the TSP by those under FERS is $179,255.

There are only 278,357 TSP participants under the older CSRS system. The average balance for these TSP investors is $192,450.

In July 2021, more than $1.4 billion was transferred into the G Fund by investors, and $717 million was transferred into the C Fund. More than $2.4 billion was transferred out of the S Fund and another $173 million out of the I Fund. While these are large numbers, the transfers provide a guide to trends being followed by TSP investors. As noted above, there is more than $794 billion in the TSP so the percentage of money being moved is relatively small.

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