Except for the I and F funds, the other TSP core funds saw small gains in March, but all of the funds except G have negative returns for year-to-date.
March brought TSP participants some relief from the downward spiral in their accounts over the first two months of the year. The widely held C-fund, which closely tracks the S&P 500 was up 3.72% for the month, making it the best performer of the 5 core funds. The S-fund was also positive, while the F and I funds were negative for the third straight month. Each of the L-funds were positive for the month, but all remained in the negative for the year-to-date period.
On March 16th, Federal Reserve chair Jerome Powell announced the beginning of the first interest rate hiking cycle since 2018. One of the goals of this rate-hiking cycle will be to reduce inflation. Inflation in the U.S. is currently at its highest rate in 40 years. After Powell’s announcement, the equity markets rallied over the last few weeks of March. However, the ongoing war in Ukraine continues to lend a high level of uncertainty to global markets. World leaders, including President Biden, are working to manage the economic impact of the war, particularly as it relates to energy supplies worldwide. There is still much uncertainty as to how this will play out over the coming weeks and months.
Performance figures for the month of March 2022 have been posted on the TSP website. 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 | 1.56% | -3.95% | 15.63% | -5.31% | 0.37%% |
| 2022 YTD | 0.44% | -5.79% | -4.59% | -9.24% | -6.77% |
| 2022 Monthly | |||||
| 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 March 31, 2022. (source, TSP.gov).
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 1.56% | -3.95% | 15.63% | -5.31% | 0.37% |
| 3 Year | 1.45% | 1.75% | 18.88% | 14.08% | 7.73% |
| 5 year | 1.93% | 2.24% | 15.95% | 12.05% | 6.84% |
| 10 year | 1.94% | 2.48% | 14.65% | 12.42% | 6.51% |
| Inception Date | 4/1/1987 | 1/29/1988 | 1/29/1988 | 5/1/2001 | 5/1/2001 |
The TSP has announced several changes to its offering in 2022. Beginning the week of May 16th, TSP will be suspending certain transactions, and there will be a timeframe where there will be no transactions at all permitted from May 26th to the first week of June. Also, there has been a lot of attention given to the new mutual fund window which is coming later this year. This will allow TSP participants to access funds outside of the core 5 funds and their L fund counterparts, for a fee. We are following these changes closely. Here is an article by Benefits Ben regarding the mutual fund window.
Finally, one of the most common sources of confusion we see is the decision regarding Roth versus Traditional TSP. Keep in mind there are no income limits on Roth TSP as there are with Roth IRA! Our advisors are happy to discuss the pros and cons of both plans with employees, please feel free to make an appointment for a complimentary consultation via the Serving Those Who Serve website (www.stwserve.com).
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.***
