July is Best Month for TSP Performance Since Trump Administration: One Fund Up 10.32%

TSP performance in July was a bright spot in a dismal year for TSP fund returns. One TSP Fund was up 10.32% for the month but is still down for the year.

The TSP performance in July 2022 was the best single month performance since 2020. Despite the stellar July returns, the 2022 year-to-date performance is still negative for all of the core TSP funds except for the G Fund.

Many FedSmith readers may be waiting for some good news after months of negative headlines. With inflation up 9.1% in the past 12 months compared to an increasingly likely pay raise of 4.6%, the war in Ukraine continuing, continuing supply chain disruptions, and a stock market that is way down in 2022, hearing good news sounds like a mirage.

Is the Positive Monthly TSP Performance a Mirage After Worst First-Half Returns Since 1970?

No one knows if the stock market will be up or down the rest of the year. But, for the month of July, here is some good news for TSP investors.

The C Fund had a return rate of 9.22% in July. The S Fund went up 10.32%. In fact, all of the TSP core funds and all of the Lifecycle Funds had positive returns in July. (Yes, even the F Fund performed positively in July.)

The last time the Thrift Savings Plan’s (TSP) C Fund went up this much was under the Trump administration in November 2020 when it was up 10.95%. The same is true of the S Fund. It was up 18.26% in November 2020. The S Fund’s 10.32% rate of return in July 2022 was also the highest return for this Fund since November 2020.

Stocks have done well in recent days. Ironically, this appears to be from a theory that slower economic growth might result in the Federal Reserve slowing down on raising interest rates as a way to slow down the inflationary spiral.

The most common stock market indexes are still showing negative results for 2022. Astute readers may recall that the S&P 500 (the index on which the C Fund is based) ended June with its worst first half since 1970. The C Fund is still down 12.58% so far in 2022. It was down 19.96% for the year at the end of June.

Highest TSP Returns in July and Worst Performing TSP Fund in 2022

For July 2022, the TSP Fund with the best return was the S Fund with a return of 10.32%. The C Fund was not far behind with a return of 9.22%. The I Fund had a return of 5.15%.

So far in 2022, the G Fund still has the best performance with a positive return of 1.41%. The S Fund is down 20.48% so far this year and the C Fund is still down 12.28% for the year.

Worst TSP Fund Performance in 2022 and How S Fund Has Performed in Recent Years

Which TSP Fund has the most dismal performance so far in 2022? While the S Fund looks great for its performance in July, it is still at the bottom of the list for overall 2022 returns. As the chart below demonstrates, the S Fund has a return of -20.48% so far this year.

Those who invest in the S Fund may prefer to look at a longer track record for this small company fund. This may give S Fund investors a better perspective. Here are the S Fund returns for the past five years:

YearAnnual Return

As is often the case, an investment that requires taking more risk often provides the highest returns over the long term. Small companies can go up faster than larger companies. They can also go down faster than larger companies.

Larger companies may be able to raise prices faster than small companies to keep up with rapidly rising inflation. On the other hand, small companies can grow faster when the economy is solid and growing. Academics and politicians often argue about whether the American economy is really in a recession today (How should a recession be defined in 2022? How can we shift the blame to others?).

The reality, aside from self-serving arguments, is the economy is now shrinking. The S Fund has suffered the most as a result.

The larger risk associated with the S Fund is probably the reason only 8.8% of TSP investors’ money has been allocated to the S Fund. There is less risk in the G Fund (33.2% allocation of TSP investor’s money) and the C Fund (29.2% of TSP investor’s money).

On the other side of the risk-return analysis, the S Fund will sometimes go up much more than the G Fund or even the C Fund over the duration of federal employees’ careers, and provide TSP investors with more money available to them after they retire.

TSP Performance for July 2022, Year-to-Date and 12-Months

The tables below list the TSP performance for July 2022, the year-t0 date returns, and the 12-month returns for all of the TSP Funds:

FundJuly 2022Year-to-Date12 Month
G Fund0.26%1.41%2.02%
F Fund2.47%-7.86%-8.87%
C Fund9.22%-12.58%-4.64%
S Fund10.32%-20.48%-21.59%
I Fund5.15%-14.77%-13.46%
FundJuly 2022Year-to-Date12 Month
L Income2.21%-2.74%-1.19%
L 20253.50%-5.79%-3.45%
L 20305.00%-8.53%-5.62%
L 20355.47%-9.53%-6.46%
L 20405.92%-10.48%-7.24%
L 20456.33%-11.34%-7.98%
L 20506.71%-12.13%-8.64%
L 20557.89%-14.27%-10.16%
L 20607.90%-14.27%-10.17%
L 20657.90%-14.28%-10.17%
All TSP returns are available at TSPDataCenter.com.

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