2022 Disappointment: TSP Performance Down in January, One Fund Down 10%+

TSP fund performance in January 2022 was not good. One TSP fund was down more than 10% and all core funds were down except for the G Fund.

After a banner year in 2021, performance of the TSP funds is not good so far in 2022. For the first month of the new year, Thrift Savings Plan (TSP) returns have dropped considerably.

TSP Returns Drop: S Fund Down 10.07%

With the exception of the G Fund, TSP returns were negative for every fund. The G Fund was the exception with a positive return of 0.13%.

While the returns on the last day of January went up, for the month, the S&P 500 index experienced its worst month since March 2020. As this is the index on which the C Fund is based, it dropped as well. In March 2020, the C Fund went down 12.40% in the month. In that same month, the S Fund went down 21.40% and the I Fund was down 13.87%.

January 2022 was not as bad as March 2020. In January 2022, the C Fund lost 5.18%, the S Fund was down 10.07% and the I Fund was down 3.96%.

12-Month TSP Performance Look Better Than January 2022 Returns

While the monthly performance in January looks scary, over the past 12-months the picture looks brighter. The C Fund is still u9 23.27% for the past 12 months and the I Fund is up 8.22% for that time period. The S Fund is still down for the past 12-months.

The S Fund consists of smaller companies and is often more volatile than other funds. It goes up faster when the market is rising and often falls more dramatically when the market goes down. In 2020, for example, the S Fund was up 31.85% for the year while the C Fund was up 18.31%.

TSP Performance for January 2022 and Past 12 Months

Here are the monthly returns for all of the TSP Funds for January 2022 and the TSP fund performance for the past 12 months.

G FundF FundC FundS FundI Fund
12 Month1.45%-2.83%23.27%-1.68%8.22%
All TSP returns are available at TSPDataCenter.com.
L IncomeL 2025L 2030L 2035L 2040
L 2045L 2050L 2055L 2060L 2065

What Happened in January?

What caused the stock market to go down in January? Inflation and its ripple effects played a major role in the drop.

The Federal Reserve indicated that in response to the rising inflation everyone is experiencing, it will likely start increasing interest rates when it meets again in March. The Federal Reserve Chairman also indicated it is possible interest rates will be raised every six weeks or so—an event that has not occurred since 2006.

Adding to the volatility: the continuing possibility of a Russian invasion of Ukraine and the surge of the Omicron variant of COVID.

Interest rates going up quickly are likely to stem the tide of inflation but can have a negative impact on the economy and increase the large stock price swings we have experienced in the past month. That volatility is likely to decrease when the action to be taken by the Federal Reserve appears to be having a dampening impact on the rapid rise in inflation.

The TSP is Growing

In January 2021, the TSP had just about $709 billion dollars in the plan. Way back at the end of December in 2015, the TSP had just above $458 billion in the plan, and in December 2015, the average TSP balance for FERS participants was $115,607 in their TSP and for CSRS employees it was $117,966.

For comparison, at the end of December 2021, the average balance for FERS participants was $181,279 and it was $195,424 for those under CSRS.

At the end of December 2021, the plan balance was almost $812 billion. And, in January 2021, the TSP had 6,207,339 participants. The number of TSP participants now stands at 6,521,753.

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