The size of the five basic funds differs, with the largest fund having more than ten times invested than the smallest fund. Image: Montri Nipitvittaya/Shutterstock.com
By: John GrobeDoes size matter? There’s a large injury law firm that advertises a lot in our market and one of their slogans is “size matters”. When our trivia team is within striking distance of first place, but currently out of reach of prize money, our slogan is “go big or go home”. As one who enjoys the occasional cigar, I have a tee shirt with a picture of a gran corona and the statement “size matters” on it.
What does any of this have to do with the Thrift Savings Plan? The size of the five basic funds differs, with the largest fund having more than ten times invested than the smallest fund. And the size of a fund does not always relate to its performance.
For many years, if you asked which TSP fund was the largest, the answer would have been G. The G Fund had a nine-month head start on the C and F Funds and, once automatic enrollment came into being, the G Fund was the one in which participants were automatically enrolled (though that has changed to the age-appropriate L Fund).
Over time, the C Fund (the first of the stock funds, and the only stock fund available for 13 years) began to catch up with, and eventually surpass, the G Fund. Here’s a list of Thrift Savings Plan funds by size that also includes ten-year average returns and comments. The data is as of 12/31/2023 and was taken from the TSP website.
1. The C Fund, which tracks the S&P 500, has $339B invested and a ten-year average return of 12.03%. This is the highest return of any of the funds over the last ten years and is higher than the fund’s “since inception” return. Its assets are almost twice as much as those in the other two stock funds.
2. The G Fund, unique to the TSP, has $294.9B invested and a ten-year average return of 2.32%. This is not the lowest return over the last ten years. Over the last ten-year period, the G Fund has underperformed its historical average.
3. The S Fund, which tracks the Dow Jones Total Stock Market Completion Index, has $99.9B invested and a ten-year average return of 8.82% (close to its 9.01% “since inception” return).
4. The I Fund, which tracks the MSCI ACWI ex USA ex China ex Hong Kong Index, has $78.2B invested. The ten-year average return is based on the MSCI EAFE index (which the fund tracked from its inception in 2001 until earlier this year) and is 4.63%. The Thrift Board changed indexes this year after a several year feud with Congress over China.
5. The F Fund is in last place in two categories. First, it has $33.1B in assets, and second, it has a ten-year average return of 2.02%. Though the fund has, often, outperformed the G Fund, it finds itself in the unenviable position of being dead last over the last ten years.
Will the C Fund continue to rule the roost in the Thrift Savings Plan? Maybe. We only see the future “through a glass darkly”. If we were to believe that current trends will continue, we would see that the C Fund will have at least half of the TSP’s value in a decade.
But the only thing constant is change – it’s almost certain that things will not continue as they are. Maybe we’ll have a market crash which will exalt the conservative G Fund above the stock funds. Or, maybe, the combined valuations of the S and I Funds will continue to gain on the C Fund.
You just need to stay tuned and make the best decisions you can.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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