STWS Advisor Jennifer Meyer breaks down what happened to make September the year’s first month of negative return for all TSP funds but G.
For the first time this year, every core TSP fund (core funds include the G, F, C, S, and I fund), except for the G fund recorded losses for the month ended September 30. However, the three stock funds- C, S, and I continued to show positive returns on a year to date and last 12 months period. The only fund to show negative returns year to date and over the last 12 months is the bond-focused F fund. The S fund held on to the top spot for best performing fund over the last 12 months at 42.32%, with the C fund trailing significantly at 29.98% over the same time period. However, the C fund remains on top on a year-to-date basis for 2021 at 15.90% beating the S fund’s performance of 11.66% over the same timeframe.
September’s volatility began with news that Chinese-based global real estate conglomerate Evergrande was in danger of missing significant bond payments to multiple lenders. At home, concerns over rising inflation, continued difficulty in Congressional negotiations over the infrastructure bill and debt ceiling, the likely start of upcoming Fed tapering, and uncertainty about 3rd quarter earnings due to supply chain issues created significant market jitters. While the world continues to deal with the covid pandemic, many U.S. corporations and governments are implementing vaccine mandates for their employees. The federal government has announced that all employees, except those with an exemption, are required to be vaccinated by November 22, 2021. Time will tell how the government intends to enforce the mandate, and there are several legal challenges to the mandate pending.
Performance figures for the month of September 2021 have been posted on the TSP website. The best performer for the month was the G fund at 0.11%, while the C fund was the worst for the month, at -4.65%. Monthly and year-to-date returns for 2021 are shown below. (source, TSP.gov)
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| Last 12 months | 1.20% | -0.71% | 29.98% | 42.32% | 26.04% |
| 2021 YTD | 0.99% | -1.40% | 15.90% | 11.66% | 8.56% |
| 2021 Monthly | |||||
| September | 0.11% | -0.86% | -4.65% | -4.00% | -2.81% |
| August | 0.11% | -0.18% | 3.03% | 2.00% | 1.76% |
| July | 0.13% | 1.15% | 2.37% | -1.24% | 0.72% |
| June | 0.12% | 0.74% | 2.33% | 3.46% | -1.44% |
| May | 0.13% | 0.34% | 0.69% | -0.66% | 3.61% |
| April | 0.13% | 0.82% | 5.33% | 4.23% | 3.09% |
| March | 0.11% | -1.23% | 4.38% | -0.39% | 2.35% |
| February | 0.08% | -1.45% | 2.76% | 5.21% | 2.26% |
| January | 0.07% | -0.71% | -1.01% | 2.85% | -1.09% |
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 September 30, 2021. (source, TSP.gov).
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 1.20% | -0.71% | 29.98% | 42.32% | 26.04% |
| 3 Year | 1.66% | 5.41% | 15.95% | 15.53% | 7.96% |
| 5 year | 1.98% | 3.06% | 16.86% | 16.39% | 9.17% |
| 10 year | 1.94% | 3.25% | 16.66% | 16.44% | 8.58% |
| Inception Date | 4/1/1987 | 1/29/1988 | 1/29/1988 | 5/1/2001 | 5/1/2001 |
The TSP is a critical part of an employee’s retirement plan. While no one can predict what 2021 will bring with regards to investment returns, we do know that it is important that TSP participants take a proactive role in monitoring their TSP accounts. This does not mean checking their balances and trying to time the market. Rather, it means being aware of the options available and managing those options to maximize your personal retirement outcome. At Serving Those Who Serve, we have found many employees do not truly understand the Roth TSP versus Traditional TSP. Our podcast featuring Ed Zurndorfer is a great educational resource. If you have not previously contributed to Roth TSP- it may be a good time to start before the end of 2021. As long as a contribution is made before year-end, an employee will be credited with a Roth TSP start date of January 1, 2021. Please reach out to us with questions about this rule.
Please also make sure to check that your TSP Beneficiary information is up to date. Our advisors find that a good percentage of employees have either no beneficiary on file- or what is on file is out of date. This is a critical part of planning to ensure the funds you have worked so hard to build will end up in the hands of the people or charities you desire.
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.***
