Fedweek

TSP investors overall have been transferring money among the investment funds at higher than usual rates rate as stock markets have been falling in recent weeks, although a small minority of investors account for the bulk of that activity, the TSP has said.

Between February 24 and March 17, investors moved a net $21 billion into the government securities G fund, from the other funds. The G fund cannot lose money, in contrast to the three stock funds, the bond fund and the lifecycle L funds which are portfolios of the basic five funds in differing ratios.

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About 10 percent of TSP assets were moved in that time–the TSP held nearly $620 billion in assets as of the end of February–including some money moved more than once, according to data presented at this week’s meeting of the TSP board. Money in the TSP can be moved without limit twice per month; any moves after that must be only to move money into the G fund.

About half of that activity occurred in the last week of February alone. In that week a net $9.2 billion was moved into the government securities G fund and more than $1.5 billion into the bond F fund. A net $4.9 billion was moved from the common stock C fund and $2.9 billion from the small company stock S fund, with the rest from the international stock I fund and the lifecycle L funds collectively.

Officials stressed, however, that even as the number of interfund transfers in March already has passed 200,000—versus about 100,000 in a typical month—only 5 percent of the nearly 5 million account holders have made a change.

As it did in past similar periods for stocks, the TSP has posted a message to investors to “stick to your plan . . . By the time you react to the situation, the market may be moving in the opposite direction, and you could miss out on significant gains. Remember that investing for retirement is for the long-term. Try not to let short-term market movements steer you off course.” The TSP however does not give individual investment advice.

Officials also repeated that the program is continuing to provide services as normal amid the Coronavirus pandemic.

The TSP also announced that the 2020 target date L fund will be merged into the Income fund as of the end of June, and that new L funds with target dates of 2025, 2035, 2045, 2055, 2060 and 2065 will be made available at that time. The TSP previously had said it would take those actions this year but had not specified a date.

The former three will have investment profiles putting them between the ongoing Income, 2030, 2040 and 2050 funds while the latter three will be invested virtually completely in the stock-based funds.

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