Boosting TSP Performance

THE DAILY FED

Boosting TSP Performance

The Morgan Stanley EAFE fund, which tracks stocks internationally, and the Wilshire 4500 fund, which tracks small U.S. companies, will be available to TSP investors two to three years from now.

Data from the last two decades demonstrate that when the Morgan Stanley fund is added to a C fund investment, the combined investment becomes more stable. The C fund, which is linked to the Standard & Poor's 500 index, swings up and down more frequently than the other TSP options. The Morgan Stanley fund also is volatile, but the two have tended to seesaw over the past two decades--when one goes up, the other goes down.

The Wilshire 4500 generally moves with the S&P 500, but loses more when the S&P 500 is weak and gains more when the S&P 500 is strong.

In 11 of the last 20 years, both proposed funds have outperformed the S&P 500.