Thrift Savings Plan readies two new fund options

By David McGlinchey dmcglinchey@govexec.com January 20, 2004

The Federal Retirement Thrift Investment Board expects to have two new investment funds for federal employees in place by early next year, a board spokesman said Tuesday.

Early 2005, however, is "a working goal," TSP spokesman Tom Trabucco said. "Nothing is set in stone."

The board discussed the progress of new "lifestyle" and "life cycle" funds Tuesday morning during its monthly meeting. Board officials said the investment funds are not new, but rather compilations of existing funds. The lifestyle fund would draw from existing funds and could be arranged in a conservative, moderate or aggressive investment structure.

The life cycle fund would adjust over the lifetime of the investment, according to Trabucco. The fund would begin with an aggressive approach and grow more conservative as the end date of the investment approached.

Currently, the 401(k)-style Thrift Savings Plan offers five funds: the C, F, G, S and I funds. The latter two were added to the plan in May 2001. The C Fund invests in stocks of large companies, the F Fund in bonds, the G Fund in government securities, the S Fund in small- and mid-size companies and the I Fund in international stocks.

"We are now in the stage of getting information from consultants and vendors under [a request for information] on how such an investment could be structured," Trabucco said of the lifestyle and life cycle funds. "We are moving forward on a schedule that, hopefully, could have the preliminary work done this year."

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COMMENTS

  • How wonderful... even more choices for us to lose our money on. GovExec.com reader Posted January 23, 2004 11:37 AM
  • The board will put bad investments in the TSP so we can put our hard earned money in them and prop up the view of the administration that the "economy is getting better". I am staying away from all of this stuff they are putting in TSP, it is not in my best interest to invest in something I know nothing about and would be skeptical of what "they" say it is. My money is not that long to be in all of these plans. These are the same people that cost us $36 million dollars without even letting us know the good deal they were making for us until it was completed, of course. Let the buyer beware, is still true GovExec.com reader Posted January 22, 2004 7:31 AM
  • The aticle is entitled "TSP Readies Two New Fund Options" but the TSP Board admits that the funds are in fact not "new" but compilations of existing funds. Fine, but hardly an improvement since any plan participant can easily accomplish the same thing without the "new" funds. For a real improvement I wish they would add an Equity Real Estate Investment Trust (REIT) Index Fund tracking the Morgan Stanley Eqity REIT Index. Studies have shown that the inclusion of up to 20% REIT shares can increase portfolio returns while simultaneously reducing risk as measured by portfolio volatility. The Morgan Stanley Equity REIT Index has outperformed the S&P 500 in each of the last four calendar years. The inclusion of REITs, whose performance is poorly correlated with the other index fund choices currently avsailable, would constitute a real improvement and would be a step in the right direction. GovExec.com reader Posted January 21, 2004 7:02 AM
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