Late-month market dip sends TSP funds down

By Brittany Ballenstedt

March 2, 2007

The three basic Thrift Savings Plan funds that have grown the most during the past year experienced setbacks in February, following a major stock market tumble at the end of the month.

The international investments represented in the 401(k)-style federal employee retirement plan's I Fund experienced a slight drop last month, falling 0.18 percent. But the fund's 21.11 percent 12-month return still remained by far the highest in the TSP.

The S Fund, which invests in small- and mid-sized companies by tracking the Dow Jones Wilshire 4500 Index, dropped 0.26 percent in February. But over the past year, it grew 12.27 percent.

The C Fund, composed of common stocks on the Standard & Poor's 500 Index of the largest domestic companies, dropped the most last month, falling 1.95 percent. But its 12-month gains were 12.05 percent.

The F Fund, which is invested in fixed-income bonds, posted the greatest gains for February, growing 1.53 percent. But its longer-term returns were much more measured; the fund earned 5.6 percent over 12 months.

Still, the F Fund's long-term growth is higher than that of the reliable and popular G Fund, which is made up of short-term Treasury securities specially issued to provide a higher return than inflation without any serious risk from market fluctuations. Last month, the G Fund grew 0.34 percent, for a 12-month gain of 4.98 percent.

The TSP also has life-cycle (L) options, which are a blend of the five basic funds that automatically grows more conservative as investors near retirement.

Of the five L funds, four experienced minor losses for February.

L 2040, intended for employees with a target retirement date around the year 2040, dropped 0.64 percent; L 2030 fell 0.49 percent; L 2020 lost 0.38 percent; and L 2010 went down 0.14 percent. The L Income Fund, designed for employees with planned retirements in the very near future, was the lone winner, with a 0.16 percent gain for the month.

All the L funds posted gains for the year. The L 2040 Fund continued to experience the most long-term growth, coming in at 13.28 percent over 12 months. L 2030 grew 12.25 percent in that time, L 2020 gained 11.34 percent, L 2010 earned 9.34 percent and L Income made 6.99 percent.


By Brittany Ballenstedt

March 2, 2007

http://www.govexec.com/pay-benefits/2007/03/late-month-market-dip-sends-tsp-funds-down/23865/