October TSP Performance Up; Two Core Funds Up 8%+

The TSP performance in October 2022 was up significantly with returns for some TSP funds above 8%.

TSP Bounces Back But Still Down in 2022

October was a good month for the major stock indexes as the stock market continues to be volatile this year. The Dow Jones Index went up 14% during the month and the S&P 500 index (the index on which C Fund investments are based) was up more than 8%. The Dow Jones performance was its best monthly performance since 1976.

While September was not a good month for TSP investors, TSP returns went up in October. The volatility of the stock market now turned up and the October returns lessened some of the losses from earlier this year. All of the TSP core funds, with the exception of the G Fund, are still showing significant losses for the year.

Here are the returns the TSP core funds have provided for investors this year and how these returns looked at the end of September.

YTD Return at
end of September
YTD Return at
end of October
G Fund1.94%2.29%
C Fund-23.87%-17.70%
S Fund-29.85%-23.83%
I Fund-27.25%-22.90%
F Fund-14.30%-15.38%

With the exception of the F Fund, which continued to go down in October, all of the core TSP Funds are still down significantly for the year but the losses are smaller after calculating the October returns for each fund.

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

TSP performance through the end of October 2022, the year to date and the past 12 months is listed below. More TSP fund performance data are available at TSPDataCenter.com.

FundOctober 2022Year-to-Date12-Month Return
G Fund0.34%2.29%2.55%
F Fund-1.26%-15.38%-15.40%
C Fund8.10%-17.70%-14.61%
S Fund8.59%-23.83%-27.24%
I Fund5.98%-22.90%-22.74%
L Income1.98%-4.13%-3.61%
L 20253.07%-8.48%-7.75%
L 20304.52%-12.45%-11.62%
L 20354.91%-13.89%-13.02%
L 20405.32%-15.22%-14.33%
L 20455.66%-16.42%-15.53%
L 20506.02%-17.50%-16.59%
L 20557.36%-20.14%-19.13%
L 20607.36%-20.15%-19.14%
L 20657.36%-20.16%-19.16%
Source: TSPDataCenter.com

TSP Assets Decline in September

At the end of August, the TSP plan balance was almost $727 billion. The TSP plan balance reflects the value of stocks in a year when the stock market is down. At the end of September, the plan balance was down to $689,858 billion.

At the end of December 2021, the plan balance was $811,739 billion— a difference of $121,881 billion for all of 2022 through September.

As one might expect, the average balance in the TSP for investors is also down. Here is a quick summary:

Retirement PlanAverage Balance
December 2021
Average Balance
September 2022

Will Stock Market Rebound?

There are several factors that may impact the direction of the stock market in the near future.

What interest rate will be imposed by the Federal Reserve as it tries to bring down the rate of inflation? It may conclude high rates are necessary to control the inflation rate. Higher rates for a longer time could lead to a deeper recession and this would negatively impact stock prices. The Federal Reserve is about to raise the interest rate again this week. Assuming this occurs, it would be the fourth consecutive 0.75% increase.

The Federal Reserve could signal it plans to reduce the aggressive interest rate hikes. while pausing to see the impact its actions have had on inflation. The actions the Federal Reserve decides to take will have an impact on the direction of the stock market.

The mid-term elections may change which party controls Congress. Stocks often rebound when there is gridlock in Washington. If this occurs, there are fewer policy shifts, and stocks often perform best when there is a divided government. Obviously, President Biden has another couple of years as president. If Republicans should control both Houses of Congress, he is less likely to make decisions that represent major policy shifts.

The next consumer price index (CPI) release may provide more information on whether inflation is slowing or if the pace is continuing. If it is receding, there is less likelihood of more dramatic price hikes. The next CPI report will be released on November 10th which will reflect the October CPI data. The last inflation report reflected the highest COLA for federal retirees and Social Security recipients since 1981.

Also, the status of the war in Ukraine could be significant. The increase in energy costs has been significant and the impact may loom even larger in the near future. In any event, how this war progresses is likely to continue to impact volatility in the stock market.

Is There a Silver Lining in Stock Market Volatility?

For those looking for a silver lining in the stock market’s volatility, consider this: Since World War II, whenever the Dow Jones index has logged a gain of at least 10% in October, the future performance has been outstanding.

Readers who are looking for encouraging statistics can take this into account.

According to Kiplinger, “the Dow’s three-month average return following a 10%+ October gain is 5.6%. Six months out, the average increase hits 10.7%. And as for a year later? The Dow has delivered an average return of 15.9%.”

The past may not be a prologue in this instance. The market has been volatile for a number of reasons. Supply shortages, the war in Ukraine, and the amount of money printed and added into the economy by the government is unprecedented, and political tension in the country is tense and potentially explosive during this election year.

As noted in the Kiplinger article, “Past performance, as we all know too well, is not indicative of future returns. There are no guarantees that the Dow’s excellent October of 2022 will translate into outsized gains in the months and year ahead.”

How Has Stock Market Volatility Impacted TSP Investor Actions?

At its monthly meeting a few days ago, the Federal Retirement Thrift Investment Board (FRTIB) noted, “A net $3.668 billion flowed toward the perceived safety of the G Fund in September and away from riskier investments. Monthly numbers like these are not concerning, however, given the size of the TSP. As always, we observed that the vast majority of participants seem to be sticking with their investment programs.”

Money moving into or out of the G Fund with intrafund transfers by some investors is triggered by the market going up or down. While these transfers are in the billions of dollars each month, TSP participants are generally sticking with their investment plan or ignoring short-term movement in the stock market and the immediate impact on their TSP investments.

Federal employees will be able to add more to their TSP accounts in 2023 because of rising inflation.

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