Federal employees continued to enjoy positive performance for the 12-month period ending July 31, 2021, in all but one of the 5 core TSP funds. The S fund remained the best performing fund over the last 12 months, although it did report a slightly negative return during the month of July 2021. July saw a continued resurgence in the tech sector which helped the tech-heavy C fund outperform the S and I funds for the month. Continued discussion about rising inflation alongside unemployment numbers which have improved, but not by as much as many predicted, has led many to speculate about the next steps of the Federal Reserve. The Fed is charged with a dual mandate of low unemployment and stable inflation. Many economists are beginning to question how much longer the Fed’s current policy stance of low-interest rates and bond purchases will last. The markets are very sensitive to actions by the Federal Reserve so any indication of a change in policy can lead to swift market response. As July ends, there is hope that Congress will agree to an infrastructure bill that will help put Americans back to work, amidst the ongoing concern of rising cases of the COVID Delta variant, which could potentially lead states to re-implement restrictions and slow the pace of economic recovery.
Performance figures for the month of July 2021 have been posted on the TSP website. The best performer for the month was the C fund at 2.37%, while the smaller-cap focused S fund was the worst at -1.24%. 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 | 1.09% | -0.52% | 36.42% | 51.07% | 30.49% |
| 2021 YTD | 0.77% | -0.37% | 17.98% | 14.04% | 9.77% |
| 2021 Monthly | |||||
| 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 December 2020. (source, TSP.gov).
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 0.97% | 7.50% | 18.31% | 31.85% | 8.17% |
| 3 Year | 2.03% | 5.38% | 14.13% | 15.25% | 4.68% |
| 5 year | 2.05% | 4.57% | 15.20% | 16.06% | 7.99% |
| 10 year | 2.04% | 4.07% | 13.90% | 13.32% | 5.87% |
| 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.
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.***
