The C and S-Funds lost more ground last month while the other core funds posted slight gains. STWS Advisor Jennifer Meyer provides her insight on the markets.
Dramatic swings in markets continued to be the theme in May. There is no doubt that continued volatility has tested even the most disciplined investors in 2022. Unlike the intense downturn in early 2020 due to the onset of the COVID pandemic, this current market downturn is proving to have more staying power. The S&P 500, which is very similar to the TSP’s C fund, briefly touched bear market territory in May. There was something of a rebound in the last week of the month as the major indices broke a 7 week-long losing streak to end the final week of May in positive territory. If only for the week, the rally was a welcome break. As expected, the Federal Reserve raised interest rates .50 basis points as they continue to try to tame inflation without sending the economy into a recession.
June 2022 will bring another meeting of the Federal Reserve, which is almost certainly going to continue its cycle of raising interest rates. The data is beginning to show that inflation may be slowing, which is a positive economic sign. It will take several months of data before any conclusions can be made, but for weary investors, any positive signs are welcome. TSP participants had a blackout window the last few weeks of May as TSP made enhancements to its platform. One of the enhancements is the opening of the mutual fund window. This will allow eligible participants to choose from over 5,000 funds for an annual fee, as well as a per-transaction cost. You can find articles regarding the window on the Serving Those Who Serve website.
Performance figures for the month of May 2022 have been posted on the TSP website. The I fund was the best performer for the month, with a positive 1.19% return, while the S fund was the worst, losing 3.53%. Monthly returns from 2022 and year-to-date returns for 2022 and longer-term averages are shown below. (source, TSP.gov)
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| Last 12 months | 1.75% | -7.86% | -0.23% | -20.01% | -10.31% |
| 2022 YTD | 0.90% | -8.57% | -12.69% | -20.61% | -11.01% |
| 2022 Monthly | |||||
| May | 0.21% | 1.13% | -1.65% | -3.53% | 1.19% |
| April | 0.20% | -3.75% | -8.72% | -10.57% | -6.39% |
| March | 0.17% | -2.73% | 3.72% | 0.90% | -0.33% |
| February | 0.14% | -1.08% | -2.99% | 0.03% | -2.61% |
| January | 0.13% | -2.09% | -5.18% | -10.07% | -3.96% |
Month-to-month trends as shown above are interesting, but it is important to remember that short-term market volatility is to be expected and employees should not be making investment decisions based on short-term performance. Following are longer-term rates of return for each fund, as of May 31, 2022. (source, TSP.gov).
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 1.75% | -7.86% | -0.23% | -20.01% | -10.31% |
| 3 Year | 1.46% | 0.15% | 16.42% | 10.42% | 6.75% |
| 5 year | 1.95% | 1.31% | 13.37% | 9.01% | 4.53% |
| 10 year | 1.96% | 1.97% | 14.41% | 11.80% | 7.51% |
| Inception Date | 4/1/1987 | 1/29/1988 | 1/29/1988 | 5/1/2001 | 5/1/2001 |
Finally, one of the most common sources of confusion we see is the decision regarding Roth versus Traditional TSP. Keep in mind that there are no income limits on Roth TSP as with Roth IRA! I mentioned earlier how important it is to have a TSP strategy. If you do not have one, or do not feel confident in yours, our advisors are happy to help. All federal employees are encouraged to make an appointment for a complimentary consultation via the Serving Those Who Serve website.
Please reach out to us with questions and follow our website for the most recent updates. We also run a monthly TSP webinar focused on education and presented by federal benefits expert, Ed Zurndorfer. Here is a link to our upcoming webinars.
**Written by Jennifer Meyer, Financial Planner. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Jennifer Meyer and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
***The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. The TSP is a defined contribution plan, meaning that the retirement income you receive from your TSP account will depend on how much you (and your agency or service, if you’re eligible to receive agency or service contributions) put into your account during your working years and the earnings accumulated over that time. The Federal Retirement Thrift Investment Board (FRTIB) administers the TSP.***
