Materials presented to the TSP board at its meeting Tuesday (May 24) in advance of the opening of the mutual fund investment window show that investors will have access to a feature allowing them to screen funds according to a number of criteria.
Like many other aspects of TSP account management, investing in outside mutual funds is to be done through the My Account feature of tsp.gov or through an app that also is to become available June 1.
The presentation shows that investors will be able to filter from some 5,000 funds that will become available by criteria including “global broad category” (stocks, bonds, etc.); Morningstar category (small capitalization growth, large capitalization value, etc.); the fund provider; the net expense ratio (fees); the Morningstar rating; and ratings of sustainability, environment, community development and gender diversity.
The result, it shows, will be a list of funds from different providers, leading then to a page in which the transaction is made. The TSP previously had said that money to be moved through the window first would go into a money market fund and the investor would then designate it for one or more of the available mutual funds and that new investments could not be made directly into a mutual fund but instead would have to be invested in the TSP’s own funds and then transferred.
The TSP also previously stressed that unlike the funds it offers directly, it won’t perform any type of screen of the funds itself, essentially meaning that investors putting money into any of the mutual funds will be doing so at their own risk.
That lack of scrutiny spurred separate letters this week from five Senate Republicans and four House Republicans calling on the TSP to “cancel, or, at minimum, postpone implementation” of the window unless it can assure that the available funds are “free of Chinese firms that pose a direct threat to American national security, enterprises implicated in Chinese Communist Party human rights abuses, or companies that otherwise lack the requisite financial transparency and fiduciary responsibility to qualify as prudent investment opportunities.”
While the TSP two years ago indefinitely suspended a plan to expand the international stock I fund to include China among about 20 other countries to be included in that fund, there is no indication that it will change its policies regarding the mutual fund window.