Fedweek

Expect continued flat and choppy I Fund performance until Brexit resolves and the fallout becomes clear, but with low equity valuations outside of the US it still makes sense to invest there and rebalance into dips.

All TSP funds except the bond F fund posted gains in September, led by the international stock I fund, up 2.87 percent, with the large company stock C fund up 1.87 percent and the small company stock S fund 1.06 percent.

The government securities G fund rose 0.14 percent while the F fund dropped 0.54 percent.

The gains for the lifecycle L funds were: Income, 0.51; 2020, 0.63; 2030, 1.28; 2040, 1.5; 2050, 1.69.

Early September saw the biggest upward reversal in bond yields since 2016, at one point sending the 10-year treasury note from 1.47% to 1.90%. This reversal included other types of bonds as well, and made the F Fund fall more than 2% since September 4th, which is quite a big drop for a bond fund in just a week and a half. This is because bond prices move inversely to bond yields, so rising bond yields mean falling bond prices. Read more about: interest rate effects on the F Fund

Meanwhile, Brexit uncertainty hangs over the I Fund, although that fund is comparatively cheap to S&P stocks tracked by the C Fund. While the United States deals with the uncertainty of a presidential impeachment inquiry and the ongoing China/U.S. trade war, the United Kingdom arguably has even more political headline risk. The stock market of the United Kingdom is the second largest component of the I Fund after Japan, and accounts for about 16% of the index value.