Every portfolio in the federal government’s Thrift Savings Plan finished July in the black, and the month marked the best single-month performance for the 401k-style retirement savings program since November 2020.
Mirroring the stock market’s best month since November 2020—with the S&P 500 adding 9.1%, the Dow up 6.7% and the Nasdaq Composite rising 12.4% (its best month since April 2020)—the good month was much-needed after a dismal first half of the year.
Even with the strong July, all but one of the five core TSP funds are still showing negative year-to-date performance through the first seven months of the year, with the ultra-conservative G Fund the only one in the black with a modest 1.41% gain.
The fund that needed it most got the biggest boost in July. The TSP’s S Fund, made up of small-cap businesses, rose 10.32% in July, which brought its YTD performance up to a still-scary -20.48%.
The C Fund saw a 9.22% gain in July, cutting its losses for the year so far from -19.96% through June to -12.58% through July. The C Fund is based on the S&P 500, which this year experienced its worst six-month start to a year since 1970.
The I Fund made up of international stocks finished with a 5.15% gain in the month of July, paring its losses to -7.86% for the year so far.
And the fixed income F Fund gained a modest 2.47% last month, making it the second-best-performing of the core funds through the first seven months with a -7.86% return. The best performing core fund, the G Fund made up of government securities, increased only by its statutorily mandated rate of 0.26% (down very slightly from 0.29% in June), bringing its YTD return to the aforementioned 1.41%.
FedSmith notes that the larger risk associated with the S Fund is probably the reason only 8.8% of TSP investors’ money has been allocated to it. There is less risk in the G Fund (33.2% allocation of TSP investor’s money, up from 31.3% at the end of May 2022) and the C Fund (29.2%, down slightly from 30.2% at the end of May 2022).
Checking in on the TSP’s target-date like Lifecycle Funds, the biggest increases in July were in the L 2060 and 2065 funds, which both rose by 7.9%, just slightly better than the L 2055 which rose by 7.89%. The L 2065 is -14.28% for the year while the L 2060 and L 2055 are down -14.27% YTD.
The L 2050 was up 6.71% in July (-12.13% YTD); the L 2045 up 6.33% (-11.34% YTD); the L 2040 up 5.92% (-10.48% YTD); the L 2035 up 5.47% (-9.53% YTD); the L 2030 up 5% (-8.53% YTD); and the L 2025 up 3.5% (-5.79% YTD). The L Income fund—for those already making withdrawals—had the smallest monthly increase in July of 2.21%. It is down -2.74% for the year—making it the best-performing of the lifecycle funds so far this year.
Not released just yet are the latest total of “TSP Millionaires,” or those participants with seven-figure retirement account balances. Due to the stock market’s poor performance so far this year, the number is expected to drop substantially from the last report, which was 100,364 at the end of March 2022. The number of TSP Millionaires peaked at the end of 2021, when the club had 112,880 members.
SEE ALSO:
• Dr. Fauci Inches Closer to Collecting Record Federal Retirement Package
• TSP Participants Flock to G Fund Amid Stock Market Declines
• Mayors Want TSP-Like Program for Workers Lacking Access to Retirement Plans
• TSP Recordkeeper Transition Off to Rocky Start
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.