The TSP governing board has decided to stay with its plan to expand the makeup of the international stock I fund to include stock markets of “emerging market” countries, despite opposition from some on Capitol Hill that the expansion will result in investments in Chinese companies.
Said the TSP announcement, “In coming to this decision, the Board noted that moving to the broader I Fund benchmark is in the best interest of participants and beneficiaries, a current best practice in the investment industry, and is widely recognized as a smart strategy in today’s market. The ten largest U.S. companies’ 401(k) plans all invest in emerging markets, as do the ten largest federal contractor plans and the six largest target date fund providers.”
“In addition, the 20 largest defined benefit plans—all of which are for state government workers—invest in emerging markets. TSP participants can decide which TSP funds they want to invest in,” it said.
The TSP initially decided to broaden the I fund—which currently reflects markets of nearly two dozen countries, all of them classified as fully developed—on the recommendation of a consultant. That consultant repeated the recommendation when the TSP board asked for a second look following letters from some members of Congress objecting to the inclusion of China.
Legislation (HR-2903) has been introduced in the House to block the planned change in the I fund, which currently is planned to occur next year.