TSP Update for Month Ending May 2023: C and S funds see small gains while the I fund drops over 4%.
Markets breathed a sigh of relief in May as lawmakers came together to put together a bipartisan bill to increase the debt ceiling, averting a potential global financial crisis resulting from a U.S. default on its debt. Based on unemployment and inflation data, the economy continues to show signs of resilience despite dire warnings of imminent recession. While no one would claim victory over inflation at this point, evidence shows the Federal Reserve continues to make progress towards cooling off the unusually high inflation we experienced in early 2022.
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 continue to be positive as of May 31, 2023. In May, the C fund overtook the I fund as the best performer year to date. As of the end of May, the C fund is up 9.53% year to date. The I fund is the second best performer at 7.26% year to date. The G fund has been the worst performer year to date, with a return of 1.59%.
As we enter the summer season, market watchers are anxious to predict when the Federal Reserve will end its rate hiking cycle. There are many who expect the Fed to at least pause their rate hikes in June. There will be a close eye on inflation data due to come out on June 13. That date overlaps with the June Fed meeting ending on June 14. Markets will likely cheer a pause of interest rate hiking.
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 May 31, 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 | 3.69% | -2.16% | -2.80% | -3.40% | 3.72% |
| 2023 YTD | 1.59% | 2.62% | 9.53% | 4.00% | 7.26% |
| 2023 Monthly | |||||
| May | 0.31% | -1.10% | 0.43% | 0.44% | -4.01% |
| 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 May 31, 2023. (source, TSP.gov).
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 3.69% | -2.16% | 2.80% | -3.40% | 3.72% |
| 3 Year | 2.13% | -3.49% | 12.90% | 7.89% | 8.99% |
| 5 year | 2.18% | 0.92% | 10.98% | 4.64% | 3.62% |
| 10 year | 2.18% | 1.63% | 12.00% | 8.44% | 5.03% |
| 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.***
