Investors More Conservative than Private Sector Workers

The report also says stock-related investments make up about two-thirds of private sector 401(k) plan assets but the average TSP account has almost half of its assets in the government securities (G) or bond (F) funds. “One explanation for this relatively low share of TSP participants invested in equities may be attributed to federal employees being more conservative investors than private sector employees. There is also some sense that federal workers, who take great pride in their jobs, view the G fund like private sector employees view their company’s stock. An alternative explanation may be the high level of participant inertia with a disproportionate share of members not making active investment decisions and instead settling for the default portfolio – 100 percent G fund,” the report said. The TSP is considering making changing the default fund for investors who do not choose funds to a lifecycle (L) fund which would have a mix of funds.