One feature that many Thrift Savings Plan participants like about the TSP is its relatively simplicity.  There are only five basic funds available, excluding the L funds.  The L funds themselves are simply made up of the five basic funds.  However, past TSP participant surveys have indicated that many TSP participants would like to have a wider variety of investments.  In fact, the TSP will be offering what they call a “mutual fund window” in the future to satisfy these participants.  The mutual fund window is, however, a topic for a future article; this article will deal with the TSP funds as they exist today.

Well known investment guru John Bogle (founder of Vanguard Funds) said that the TSP’s index funds are a great way to invest.  In an interview ten years ago, Bogle stated that the TSP is “…as close to a perfect retirement plan as you can have….”


The TSP began in April of 1987 with one fund, the G fund; in January of 1988 it added the C and the F funds; and in May of 2001 the S and I funds were added.  Later, in July of 2005 the L funds were created by blending the five basic funds together in different proportions.  We will take a brief look at each TSP fund in this article, but more in depth information on the Funds is available on the TSP website (http://www.tsp.gov).  From the homepage, click on “forms and publications” in the lower left hand corner and, once you get there, scroll to the bottom of the page.  There you will find individual “fund sheets” on each of the TSP funds.

The C Fund was the only stock fund available in the TSP from 1988 through mid-2001 and is larger than the other two stock funds (S and I) together.  Its return over the ten-year period ending on December 31, 2015 was 7.36% and its return since its inception has been 10.09%.  It is an index fund designed to track the return of the Standard & Poor’s 500, the 500 largest publicly traded companies in America.

The S Fund represents the rest of the domestic stock market.  It tracks the Dow Jones Total Stock Market Completion Index and has a return of 8.03% over the ten-year period ending on December 31, 2015 and its return since its inception has been 8.32%.

The third stock fund is the I Fund, which covers foreign developed markets.  It tracks the Morgan Stanly Capital International Europe, Australasia and Far East Index (which is roughly 2/3 European and 1/3 Australasia and Far East).  For the last ten years it has returned 3.2% and since its inception has a return of 4.23%

The F Fund is a fixed income index fund that tracks the Barclay’s U. S. Aggregate Index and was introduced at the same time as the C Fund in January of 1988.  Its ten-year return is 4.74%; since its inception it has returned 6.45%.  It is made up of government bonds, mortgage backed securities and high-grade corporate bonds.

The G Fund is the Granddaddy of them all, both in size and in the amount of time it has been available for TSP investors.  It appeared 9 months before the C and F Funds and contains close to half of the money that is invested in the Thrift Savings Plan.  The G Fund is made up of short-term U. S. Government securities, but pays a rate that is set by law; that is, the return on outstanding Treasury securities with four or more years to maturity.  Over the last ten years, due primarily to low interest rates, the fund has returned an average of 2.94%.  Since its inception it has returned 5.29%

It’s time for a warning about statistics – including the percentage returns listed above.


First of all, statistics are past information; they do not tell us what will happen in the future.

Secondly, the TSP funds were introduced at different times, so it is dangerous to compare their “since inception” returns.  The S and I funds were introduced in the middle of the first recession in the previous decade, and suffered another big hit when the so-called “Great Recession” of 2008 hammered stocks.  The other three funds benefited from the relative exuberance of the 1990s.