Unsurprisingly, TSP Funds Are In the Red After Brexit
The final returns for a volatile June will be available on July 1.
Several of the Thrift Savings Plan’s offerings were in the red by close of business Friday because of the global financial and political uncertainty caused by Britain’s decision last Thursday to leave the European Union.
The board that oversees the Thrift Savings Plan on Monday reported that the C, S, and I funds were down by the end of last week for the month of June, with just a few more days remaining in the month. International stocks were down 5.84 percent for the month by the end of Friday, while common stocks were in the red 2.71 percent and the S Fund, invested in small and midsize companies, was showing losses of 2.58 percent for June.
The F Fund, invested in fixed income bonds, was up 1.24 percent for June by the end of Friday. The TSP board will post the final June returns for all its offerings on July 1.
Sean McCaffrey, acting chief investment officer at the Federal Retirement Thrift Investment Board, said during the board’s monthly meeting in Washington Monday that the Brexit vote to leave the E.U. was “the dominant factor in these returns.”
Board officials said they experienced an 18 percent spike in call volume by mid-Friday morning from enrollees concerned about the impact of Brexit on their retirement investments. It’s too early to tell what kind of changes TSP enrollees made related to their portfolio investments because of Brexit, but Gregory Long, the board’s executive director, said the activity that the agency saw from participants Friday was not unusual given the volatility caused by a major international event.
The agency posted an online message on Friday the day after the historic vote cautioning TSP participants to stick to their plans and avoid chasing returns. FRTIB did not specifically mention Brexit, but emphasized the wisdom of thinking long-term about investments.
“An investment strategy of chasing returns or trying to ‘time the market’ means you have to be consistently correct two times: exactly when to get out of a particular asset class and exactly when to get back in,” the message said. “Most investment experts agree that such success is highly unlikely over long periods.”
Overall, TSP participation rates among federal employees and uniformed services members increased, board officials reported on Monday. The rate of participation among feds in the Federal Employees Retirement System (FERS) is at 89.4 percent, while the rate of participation among troops is at 44.9 percent, an all-time high. The average account balance for FERS participants increased to nearly $118,000, according to the board’s data.