One way to navigate the many fund offerings is by using the TSP’s mutual fund window “fund screener” tool. Image: Olivier Le Moal/Shutterstock.com
By: Scott Swisher, TSP Change AlertsAs of February 2024, there were over 4,500 TSP participants enrolled in the TSP’s mutual fund window, according to the Federal Retirement Thrift Investment Board—the entity responsible for administering the TSP. So what do these participants know that you don’t? The power of choice! And what have these participants overcome that you haven’t? The paradox of choice!
The paradox of choice was popularized by American psychologist Barry Schwartz whose research showed too many choices—like the nearly 5,000 mutual funds available in the TSP’s mutual fund window—results in an inability to make a decision, leading to paralysis, anxiety, and less satisfaction. So exactly how are these 4,500 plus participants using the TSP mutual fund window despite this paradox of choice?
They know what they are looking for: One way not to be overwhelmed by the nearly 5,000 choices is to know what you are looking for before those 5,000 choices are put in front of you. The best way to do this is to determine what is “missing” from your investment portfolio prior to enrolling in the TSP’s mutual fund window. This could include both TSP and non-TSP assets, or perhaps TSP-only assets. Whatever your personal situation, it would help if going into your mutual fund window experience you knew your investment account could benefit from some, for example, additional real estate exposure, large cap growth exposure, or possibly even exposure to the popular/large asset NASDAQ-100. All of these investment options are available in the mutual fund window. None of these investment options are available through the TSP’s five standard fund options (C, S, I, F, G) or the lifecycle funds (the so called L funds).
They are using the mutual fund window screener: One way to manage the TSP mutual fund window’s paradox of choice is by using the TSP’s mutual fund window “fund screener” tool. This tool is found within the mutual fund window itself, and can be accessed only once the participant has paid $150 to enroll in the mutual fund window. I find this tool quite useful! You can filter on one or multiple items/categories at once. You want to find large-cap growth equity funds receiving a 5-star Morningstar rating with an expense ratio of less than 0.5%? No problem, four quick filters later these four funds are returned for you. You want to find sustainable large-cap foreign growth funds? Interesting choice, but not an issue, three filters later and these 13 funds are returned.
They are partnering with a professional: Many financial advice companies have expertise in advising 401(k) participants. Some companies even specialize in this service. Working with a qualified individual with expertise in advising clients on brokerage windows found in 401(k) plans—which is all the TSP’s mutual fund window is—is a great way to overcome the paradox of choice!
Scott Swisher helps federal government employees better manage risk where they hold their largest amount of investment account assets, in their TSP accounts. He is owner of TSP Change Alerts, a company providing TSP tactical reallocation services to individual federal government employees. Scott can be reached at scott@tspchangealerts.com.
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