TSP Update for Month Ending April 2023 – all core funds see a little growth in April, except the S fund.
As we turn the calendar to a new month, market sentiment is dispersed across the spectrum of extreme fear to cautious optimism. There is significant economic data to support both extremes, and only time will tell which will have been the correct viewpoint. On the one hand, there is fear over continued banking concerns after three U.S. banks have failed in the last two months. On the other hand, the fact that most banks are holding up well as increased scrutiny by regulators on bank balance sheets smothers the industry is a positive sign that perhaps this will not become a catalyst for a major market downturn.
Some economists argue that the market may have bottomed last October while others predict an upcoming recession could produce another significant market decline. All this uncertainty understandably rattles the nerves of the most disciplined investors. However, looking at the year to date returns for the core funds in TSP (remember the L funds are each a combination of the 5 core funds), TSP participants have reason to cheer as year-to-date all five of the core funds are positive as of April 30, 2023. The I fund continues to be the best performer year to date as well as over the last 12 months. In every meeting I have with TSP participants, I stress the importance of diversification across the funds. Data show the I fund is one of least frequently used funds in TSP. Those who do not have an allocation to the I fund are missing out on its current outperformance.
During May, market watchers will be anxious to anticipate how close the Federal Reserve is to pausing its rate hiking cycle, as well as anticipating any future interest rate declines. As has been the case for some time, the inflation rate and unemployment rate numbers coming out in May will be a key driver in the answer. Once again, only time will tell if this is the start of a new bull market cycle or just a short-term market rally. What we do know, is that trying to time the market is nearly impossible for the best money mangers in the world. On a weekly basis, I met with federal employees who believe that they, or someone they know, can time the market. The data show that it is just not realistic.
If you have questions on how to best manage your TSP, please schedule a complimentary meeting or attend a TSP webinar. You can find the schedule here.
Monthly and year to date returns effective April 30, 2023, and longer-term averages are shown below. (source, TSP.gov)
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| Last 12 months | 3.64% | -0.76% | -1.09% | -8.86% | 9.23% |
| 2023 YTD | 1.28% | 3.76% | 9.16% | 3.54% | 11.74% |
| 2023 Monthly | |||||
| April | 0.30% | 0.61% | 1.56% | -2.18% | 2.87% |
| March | 0.35% | 2.55% | 3.67% | -2.90% | 3.11% |
| February | 0.28% | -2.58% | -2.44% | -1.63% | -2.84% |
| January | 0.34% | 3.25% | 6.28% | 10.82% | 8.43% |
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 April 30, 2023. (source, TSP.gov).
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 3.64% | -0.76% | -1.09% | -8.86% | 9.23% |
| 3 Year | 2.04% | -2.98% | 15.15% | 11.33% | 12.49% |
| 5 year | 2.18% | 1.31% | 11.23% | 5.37% | 4.04% |
| 10 year | 2.16% | 1.56% | 12.32% | 8.83% | 5.28% |
| Inception Date | 4/1/1987 | 1/29/1988 | 1/29/1988 | 5/1/2001 | 5/1/2001 |
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**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.***
