November TSP Returns Rise and Fall Fast
Stock prices can change fast. The performance of the Thrift Savings Plan (TSP) funds in November 2021 is a prime example of how quickly events change and impact the stock market and the TSP returns of federal employees.
Earlier in the month, FedSmith published an article that read, “The C Fund has continued its upward trajectory so far in November. Through November 18, the C Fund is up 2.25% for the month, and for 2021, the C Fund is now up 26.82%.”
Less than two weeks later, events have stirred the pot and these events had a significant impact on the November TSP returns.
November TSP Performance: Best and Worst Returns
C Fund Performance YTD
At the end of November, the C Fund was up 23.16% for the year-to-date—a drop of more than 3% in less than two weeks. For the past 12 months, the most popular fund among the TSP core funds is still up 27.89%. This is still a very good return but a sudden drop in value is always disappointing.
For November, the C Fund was down 0.69%. That actually is not bad as the S Fund was down -5.03% and the I Fund return was -4.66% for the month.
F Fund and G Fund Performance
The F Fund, which is down -1.14% for the year, actually had the best monthly return among the TSP core funds in November. This bond fund was up 0.30% .
The F Fund and the G Fund (0.13% in November) were the only TSP Funds with positive returns for the month. These funds are bond funds, instead of stocks, and can provide some stability for investors when the market goes down. That is what happened last month.
S Fund Performance
The S Fund, which has provided solid returns to investors, finished at the bottom of the pack in November with a monthly return of -5.03%. It is still up 19.90% over the past twelve months and 11.80% so far in 2021.
TSP Performance for November 2021, 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 Fund | F Fund | C Fund | S Fund | I Fund |
| Month | 0.13% | 0.30% | -0.69% | -5.03% | -4.66% |
| 12 Month | 1.33% | -1.01% | 27.89% | 19.90% | 10.97% |
| Year-to-Date | 1.26% | -1.14% | 23.16% | 11.80% | 6.04% |
| | L Income | L 2025 | L 2030 | L 2035 | L 2040 |
| Month | -0.50% | -1.09% | -1.55% | -1.72% | -1.89% |
| 12 Month | 5.43% | 10.14% | 12.64% | 13.76% | 14.90% |
| Year-to-Date | 4.32% | 7.70% | 9.58% | 10.38% | 11.19% |
| | L 2045 | L 2050 | L 2055 | L 2060 | L 2065 |
| Month | -2.04% | -2.20% | -2.71% | -2.71% | -2.71% |
| 12 Month | 15.86% | 16.85% | 20.54% | 20.54% | 20.53% |
| Year-to-Date | 11.85% | 12.55% | 15.21% | 15.21% | 15.20% |
What Happened in November?
Stocks in the S&P 500 index fund dropped late in the month when investors pulled out of riskier assets such as stocks and sought financial protection in government bonds (the G Fund is the TSP Fund for government bonds) as uncertainty about stock prices mounted.
President Biden may not be happy with the Federal Reserve Chairman, Jerome Powell. Chairman Powell stated that the Federal Reserve is going to consider a policy of winding down its easy-money policies because of concerns about inflation. No doubt, concerns about inflation and its impact on the economy impacts the value of stocks (and, therefore, the value of investments in the TSP). While “transitory inflation” may not be significant, inflation can have a big impact on the cost of living for all of us.
What About “Transitory” Inflation?
Federal Reserve Chairman said in a Congressional hearing Tuesday it was time to stop referring to inflation in the economy as “transitory”. “Transitory inflation” has been a talking point for administration officials, presumably to assure the public that there was no reason to be afraid of rising prices as the increases would be short-lived.
Earlier this month, the Bureau of labor Statistics reported inflation is now running at 6.2%. Four months ago, President Biden suggested price increases were only temporary. At the time, inflation had risen from 1.4 percent in January to 5.4 percent in June. The Consumer Price Index, as measured by BLS, still continued at 13-year highs in July, August and September.
Inflation does not appear to be falling anytime soon, and the Federal Reserve Chairman said in his statement “it now appears that factors pushing inflation upward will linger well into next year.”
Omicron COVID Variant and November TSP Returns
The recent publicity surrounding the latest mutation of COVID impacted stock prices. Fear of a new pandemic had an immediate impact on the price of oil and other commodities which dropped and effectively serves as a restraint on inflation.
Fear of the unknown nature of the new mutation and the impact it could have in our country and throughout the world had an immediate negative impact on stock prices.
As sometimes happens with unexpected bad news, there is an immediate impact on stock prices. Often, the initial fears are exaggerated and stocks may bounce back quickly. When more is known about the new variant of COVID, there may be a dampening impact on the element of fear among stock market investors.
Investing in 2021
There is a tendency among stock traders to buy and sell on emotion. While your November TSP returns may be disappointing, the stock market performed well overall in November. Stocks were down for the month largely as a result of several days of bad news coming right at the end of the month.
No one knows, of course, what will happen next. Trying to anticipate the future and trying to time trading stocks based on short-term events does not usually work out well. The TSP Funds have done very well and are likely to continue to do so. Most investors will usually do better with having an investment plan and sticking with that plan instead of quickly reacting to the latest news headlines.
FedSmith wishes all readers a Merry Christmas and hopes your TSP investment decisions are successful in providing a good retirement income now or in your future retirement.
