The past two weeks have been traumatic for many Thrift Savings Plan (TSP) investors as China woes dragged down global stock markets. The good news is that the market crash in China has bottomed out and is now on the upswing while the TSP F Fund holds steady. The U.S. markets are a step ahead of Asia, and have already been rallying for a couple of days now.
The TSP funds are now responding to the rally and you can see small gains in the C, S and I funds. The C Fund was at 28.1113 on Aug 17, and had dropped to 24.9844 by Aug 25. It has now regained some lost ground over the last two days, and is currently at 26.5951.
The S Fund likewise was at 38.0240 on Aug 17, dropped to 34.1023 by Aug 25, and has gained a bit in the last two days to end Aug 27 at 35.8008. The I Fund was at 25.8338 on Aug 17, dropped to 23.9315 by Aug 25, and has reversed some of the losses by climbing up to 24.5467 by Aug 27.
The rally will continue through the few remaining days of August, but TSP investors are likely to end August with a net loss for the month.
The bright spots in this market mayhem was the TSP F fund, which held steady and actually gained some ground while the rest of the funds were heading south. The F Fund began at 16.9604 on Aug 17, and had climbed up to 17.0259 by Aug 21. It shed its new-found gains as the market rallied, and is now back to 16.9400 as of Aug 27.
TSP F Fund Offers Hedge Against Stock Market Crash
Unlike other TSP funds, the F Fund’s performance is linked to the Barclays Capital U.S. Aggregate Bond Index, a broad index representing the U.S. bond market. Bonds typically provide a safe harbor for investors who are able to initiate TSP withdrawals from other funds into the F fund or other bonds when the stock market is volatile. The F Fund will hold steady or may even gain when there is a stock market crash.
The point here is that investing into the F Fund provides investors with a hedge that can balance out stock market losses and provide some stability for your investment portfolio. The G Fund is just as desirable for the same reasons. However, it is invested into treasury bonds, and investments are suspended at this time due to Congress’ inability to raise the debt limit.