How TSP Investors Quickly Reacted to 2025 TSP Performance
In December, interfund transfers from Thrift Savings Plan (TSP) investors started flowing into the I Fund. Almost $5.7 billion moved into the I Fund during the month through interfund transfers. At the same time, about $2.4 billion was transferred from the G Fund, $1.6 billion from the C Fund, and $2.3 billion from the S Fund.
That may not be a big surprise. In 2025, the I Fund delivered a return of 32.45%. The C Fund had a return of 17.85% and the S Fund 11.38%. While the C and F Fund returns were excellent, 32.45% is a much higher return. Perhaps those who missed out on I Fund returns last year are hoping 2026 will be a repeat and swell their future retirement fund accounts with another year of generous results from the I Fund.
To put this into perspective, the TSP has more than a trillion dollars in assets, so the amount being transferred is not a large portion of total TSP assets.
I Fund Asset Allocation by TSP Investors
The I Fund has not been popular among some TSP investors, as reflected in participants’ fund allocations. At the end of December 2025, the chart below shows how participants allocated their investments among TSP Funds.
Lifecycle Funds hold shares of all funds, with the more aggressive stock funds (i.e., a longer time until the projected retirement date) having a greater percentage of TSP stock funds than the more conservative Lifecycle Funds.
For example, the L 2075 Fund allocates 34.65% to the I Fund, 52.48% to the C Fund, and 0.36% to the G Fund.
At the other end of the spectrum, the L 2030 Fund allocates 19.95% to the I Fund, 29.64% to the C Fund, and 37.38% to the G Fund.
The most conservative L Fund is the L Income Fund. It has 9.63% in the I Fund, 67.06% in the G Fund, and 14.3% in the C Fund. This allocation means the L Income Fund will lag behind other funds as the stock market goes up. According to the TSP:
You should consider investing in the L Income Fund if you were born before 1965, are currently withdrawing money from your TSP account, or plan to begin withdrawing before 2028. You should also consider investing in the L Income Fund if you would like to take advantage of daily rebalancing to asset allocation targets that are designed to support your creation of retirement income through repeated withdrawals from your TSP account.
| Fund | Participant Allocation | Individual TSP Funds Share of Total |
| G | 22.4% | 29.6% |
| F | 2.2% | 3.7% |
| C | 35% | 44.2% |
| S | 8.6% | 10.9% |
| I | 5.3% | 11.5% |
| L | 26.3% | n/a |
| Mutual Fund Window | 0.1% | 0.1% |
| Total | 100% | 100% |
TSP Trends Reflect Nationwide Trends in Foreign Stock Investments
It is not just TSP investors that are putting more money into global stocks. As noted in U.S. News & World Report:
Global equity funds witnessed the largest weekly net purchase in 15 weeks in the week to January 14, as investors pushed world stocks close to record highs, extending momentum from last year and brushing aside concerns over the global economy and geopolitics.
Investing based on the past returns of a stock fund may not be a wise idea unless the investor has a reason to expect continued good news for the fund’s stocks. Probably the most common reason for continued interest in increasing allocations into global stock funds is that foreign stocks appear cheaper, more balanced, and more useful for diversification than they have in recent years. This argument is especially compelling after international stocks beat the U.S. market by a significant margin in 2025.
Latest TSP News
The Federal Retirement Thrift Investment Board (FRTIB) recently announced that in December 2025, more than 90% of Blended Retirement System (BRS) military Active Duty participants contributed at least 5% of their salary to the TSP.
In addition, nearly three million participants had some Roth money in their TSP account. On January 1, 2026, SECURE 2.0 Act provision 603 went into effect. It requires catch-up contributions in 2026 to be designated as Roth for participants with wages above $150,000 in 2025.
Based on TSP returns as of Monday, January 26, 2026, most all TSP Funds are showing a positive return. This gives TSP participants a great start in building up their retirement income. As the year progresses, FedSmith will keep our readers advised of how their funds are performing.
