With the TSP total assets now above $1 trillion for the first time and the C Fund price above $100 per share, overall TSP performance jumped in July with the largest TSP stock funds (C and S Funds) producing positive returns in July. The C Fund was up 2.24% and the S Fund was up 2.53%.
I Fund Performance in July
In the midst of the positive returns for the other core stock funds in the TSP, what happened to the I Fund?
The I Fund has the best return for the year among the TSP’s stock funds with a gain of 16.89%. In July, however, it went down 1.52%.
With more TSP investors moving money into the I Fund as a result of its strong performance in 2025, they may be wondering why it went down last month. These are probably the main reasons for the I Fund’s drop in July.
A Stronger American Dollar
A stronger dollar reduces the value of foreign earnings when converted back to American dollars. This influences returns for American investors in international markets.
In July, the dollar strengthened due to persistent inflation in the U.S. This means the Federal Reserve might delay interest rate cuts, making U.S. assets more attractive.
Weak Economic Data from Europe and Japan
- Eurozone economies (notably Germany and France) showed signs of slowing growth or even contraction.
- Japan’s stock market, which had been strong earlier in the year, saw a pullback with concerns over inflation and monetary policy adjustments by the Bank of Japan.
Concerns About International Politics
- Ongoing tensions in the Middle East and uncertainty about China’s economy.
- Investors moved away from riskier international equities, especially in Europe and Asia.
Global Interest Rate Divergence
- While the U.S. was contemplating rate cuts, other central banks (like the Bank of England) signaled possible rate hikes or maintained a hawkish stance due to persistent inflation.
- This created investor uncertainty and volatility in currency and equity markets.
Profit-Taking
- The I Fund has performed well in 2025. The July decline could be attributed to profit-taking by institutional investors in the companies that are in the I Fund.
TSP Performance for July 2025, Year-to-Date, and 12-Month Returns
Here are the latest TSP returns so far in 2025 as of the end of July.
| Fund | July Return | 2025 Return | 12-Month Return |
|---|---|---|---|
| G Fund | 0.37% | 2.60% | 4.40% |
| F Fund | -0.25% | 3.76% | 3.39% |
| C Fund | 2.24% | 8.56% | 16.28% |
| S Fund | 2.53% | 4.69% | 11.58% |
| I Fund | -1.52% | 16.89% | 11.94% |
| L Income | 0.50% | 5.07% | 7.22% |
| L 2030 | 0.69% | 7.91% | 10.61% |
| L 2035 | 0.72% | 8.40% | 11.16% |
| L 2040 | 0.75% | 8.88% | 11.71% |
| L 2045 | 0.78% | 9.28% | 12.17% |
| L 2050 | 0.81% | 9.67% | 12.64% |
| L 2055 | 0.95% | 10.92% | 14.24% |
| L 2060 | 0.95% | 10.92% | 14.24% |
| L 2065 | 0.95% | 10.92% | 14.24% |
| L 2070 | 0.95% | 10.94% | 14.25% |
| L 2075 | 0.95% | 0.95% | N/A |
Positive TSP Performance in July
Most TSP Funds had positive returns in July. The only exceptions were the I Fund and the F Fund.
The F Fund declined because of interest rate concerns. The F Fund tracks the Bloomberg U.S. Aggregate Bond Index. This index includes long-term U.S. Treasuries and corporate bonds.
In July, the yield on the U.S. 10‑year Treasury rose above levels seen earlier in the summer. This was likely due to the prospect that the Federal Reserve will not reduce interest rates and concerns about inflation kicking up again. As bond yields rise, bond prices fall, and the F Fund share prices declined as a result.
The C Fund went up 2.24% in July. It is up 16.28% over the past twelve months.
What Companies Are in the C Fund?
The TSP’s C Fund includes large-cap tech companies like Alphabet (Google), Nvidia, Microsoft, Meta Platforms, and others as it tracks the S&P 500 Index. These companies are among the top-weighted holdings of the S&P 500.
Based on recent data from a variety of sources, here are the approximate percentages of these companies in the S&P 500 index, and therefore close to what is in the C Fund.
Based on the most recent data:
- Microsoft: ~6.6% of the S&P 500
- Nvidia: ~6.5%–7.5%
- Alphabet: 3.6%
- Meta Platforms: ~3.0%
But the actual percentage of companies in the index funds in these high-tech categories is even larger. Adding in other members of the Magnificent Seven—Apple, Amazon, and Tesla—the combined weight is even larger.
This tech concentration has been increasing in recent years. Collectively, these seven mega-cap tech stocks make up about 30%‑33% of the S&P 500 (and thus the C Fund).
How Does the C Fund Compare to the S Fund in Concentration of Stocks?
What about the S Fund? Does it have most of its assets in just a few companies like the C Fund? The answer is “no”.
The companies that comprise the S Fund are more evenly distributed across thousands of smaller companies. No single company makes up more than about 1% of the index. In fact, the top 10 holdings probably account for only 5‑7% of the total index, a much smaller concentration than companies in the C Fund.
While companies in the C Fund are names familiar to most of us, these companies are largely unknown as they are relatively small companies (thus, they are in the S Fund).
- MRVL Marvell Technology Inc.
- APP Applovin Corp Class A
- CRHCRH Public Limited Plc
- DASH Doordash Inc Class A
- MSTR Microstrategy Inc Class A
- TTD Trade Desk Inc Class A
- SNOW Snowflake Inc Class A
- COIN Coinbase Global Inc Class A
- SQ Chaniere Energy Inc
- LNG Block Inc Class A
How Will Stocks Fare Later in 2025?
No one knows, of course, where the stock market will end up at the end of the year. That does not stop investors from wondering, nor does it stop analysts from making projections about the remainder of the year.
Here are some considerations as TSP investors mull over their investment strategy.
Risks to Stock Prices
- The S&P 500 trades at forward price/earnings multiples in the low‑to‑mid 20s. This is a high figure and similar to what the market reached during the dot‑com era bubble. If there are surprises in earnings results or inflation surprises, this could spark a reduction in the value of stocks.
- Note the concentration of a small number of stocks in the C Fund listed above. These stocks have performed very well, and they are the primary reason the stock market has done so well. Their success has not been replicated in most other stocks. This indicates that there is more vulnerability in stock prices if anything spooks investors.
- There is a lot in financial headlines now about tariffs. Developments in tariff policies, fiscal uncertainty, elevated bond yields, and geopolitical tension, such as American and European Union trade frictions, could lead to volatility in stock prices.
More Optimistic Scenarios for Stock Prices
Morgan Stanley, a global leader in financial services, projects an S&P 500 target of 6,500–6,550 by year-end, with further strength up to 7,200 by mid‑2026. This would be a gain of about 12% from current price levels. This optimism is based on earnings growth in artificial intelligence, a weaker U.S. dollar, tax benefits from fiscal policy, and eventual interest rate cuts by the Federal Reserve in the coming months.
Other financial service firms like Goldman Sachs or Bank of America project year-end targets of about 6,300–6,600 for the S&P 500 index. This would be an increase of 4–9% from current levels of ~6,300.
Conclusion
Investing in stocks involves taking risks. You can lose money in the stock market.
Some TSP investors probably expect positive TSP returns every year. That does not happen. If you are one of these people, it means you will panic and start selling your TSP stock funds when the market goes down (and it always goes down from time to time). Panic or selling on an emotional reaction will seriously erode your stock market returns.
It makes sense to pay attention to your investments. It is also a good practice to pay attention to economic and political factors that impact the value of your TSP investments. Over time, many TSP investors will alter their investments, especially when earning retirement.
We hope this quick summary of some of your TSP Funds will be helpful.
