Stock Market Volatility Impacting TSP Stock Funds
October was not a good month for the final stock market numbers. All of the TSP Funds, except for the G Fund, declined in October.
Despite the latest monthly returns, 2024 has been a great year for those investing in stocks through the Thrift Savings Plan (TSP). Here is how the core TSP stock funds have done so far this year:
- C Fund up 20.93%
- S Fund up 12.35%
- I Fund up 7.31%
Those are very good returns. The differences in the stock funds shows up over time. Small company funds (the S Fund) often react differently than the larger company stocks in the C Fund and foreign stocks (the I Fund) often go up or down in different ways than domestic (American) stocks. TSP investors that diversify their investment dollars among the Funds often benefit with greater returns when some of the smaller Funds benefit from a higher return.
For example, here is how these same funds performed in 2024 at the end of the previous month:
- C Fund up 22.04%
- S Fund up 11.69%
- I Fund up 13.17%
The S&P 500 dropped 1.9% on the last day of October after some disappointing company financial returns were reported. The monthly stock market returns would have been different if the drop in stocks had happened one day later.
We can expect more volatility in the near future with a hotly contested presidential election in November, concerns about some high-tech company valuations and other financial reports scheduled for release.
Despite the volatility, and concerns investors may have about the rapidly approaching presidential election, stock market returns have been very good this year despite the monthly drop in October.
This chart displays the returns for October, for the year-to-date and for the past twelve months.
TSP Returns for October 2024, Year-to-Date and 12-Month Return
| Fund | October Return | 12-Month Return | Year-to-Date |
|---|---|---|---|
| G Fund | 0.33% | 4.48% | 3.65% |
| F Fund | -2.48% | 10.49% | 1.93% |
| C Fund | -0.91% | 37.95% | 20.93% |
| S Fund | 0.59% | 37.96% | 12.35% |
| I Fund | -5.17% | 22.75% | 7.31% |
| L Income | -0.50% | 11.52% | 6.48% |
| L 2025 | -0.61% | 13.97% | 7.36% |
| L 2030 | -1.36% | 21.22% | 10.39% |
| L 2035 | -1.54% | 22.96% | 11.02% |
| L 2040 | -1.70% | 24.67% | 11.66% |
| L 2045 | -1.83% | 26.17% | 12.21% |
| L 2050 | -1.95% | 27.64% | 12.76% |
| L 2055 | -2.21% | 32.34% | 14.82% |
| L 2060 | -2.21% | 32.35% | 14.82% |
| L 2065 | -2.21% | 32.35% | 14.81% |
| L 2070 | -2.22% | 2.87% | N/A |
Interfund Transfers in September
A small percentage of TSP investors transfer funds in any given month. Last month, perhaps because of the increasing volatility in stocks and the long-running bull market, about $1.4 billion was transferred into the G Fund.
Smaller amounts were recorded as transfers from the TSP stock funds. $352 million was transferred from the C Fund, $825 million from the S Fund, and $87 million from the I Fund.
At the end of September, total assets in the TSP were $954 billion, so a movement of $1.4 billion is a very small percentage of TSP assets.
Over time, these incremental transfers start to make a difference. As noted in
Your TSP and The “Great Rotation”, TSP investors gradually switched billions from the G Fund into the TSP stock funds during the latest bull market. The G Fund used to be the fund with the largest percentage of investor funds. The C Fund now holds that distinction.
The change was incremental and happened over many months. As the stock market continued to go up, more investors choose to invest in the C Fund instead of the G Fund.
Investors Choose How to Invest Their TSP Assets
As an example, at the end of December 2022, the G Fund had $240 billion in assets and the C Fund had $210 billion. Obviously, the G Fund was the preferred investment vehicle for TSP investors.
But, at the end of September 2024, the G Fund had $232.5 billion in investor assets and the C Fund had $340 billion in investor assets.
The recent modest transfer of funds into the G Fund may be nothing more than a small blip in the overall trend of moving TSP money into stock funds. Or, perhaps, some TSP investors are anticipating a drop in stock market values that could be an early sign of a new trend back to the G Fund. If that does occur, it is likely to happen gradually over many months, just as the last transition to the C Fund has happened.
