The question: I wish there was more transparency in the C, S, and I funds, as to what the actual composition of the funds are...
Last fall I pulled information from the TSP website, the index websites and Blackrock who manages some of the funds. I wanted to better understand the funds and do some side-by-side comparisons. I think it provides a pretty good perspective of how the TSP funds fit in to the overall market. Here is the page I loaded it on...
The TSP C fund invests in the SP500 which is the most standard offering in any retirement account. The TSP S fund is more unique but I think it was chosen by TSP since it has no overlap with the SP500 and allows you to index in the rest of the US stock market. This index fund does not invest in all the other 4500 listed companies since it would be too expensive, but they do invest in enough to closely track the non-SP500 index. An 80/20 allocation would track the total US stock market since the top 500 companies make up about 80% of the US markets value. If you go 50/50 you are tilting your account toward small caps performance.
I also compared the TSP funds to ETF funds and Mutual Funds for comparison. Several companies are now offering a very good low cost funds today - not just Vanguard anymore. These companies usually have low or no fees for trading their own funds. I never recommend transferring out of TSP when you retire, but if you have other retirement funds these companies and funds look very competitive.
Consider, if you are paying 2% a year for active management you will be giving away half of your gains in 35 years.
It would be nice if TSP offered sector funds since they would also have low fees. Of all the broad index funds I have looked at, the NASDAQ-100 (^NDX) is the most impressive. *After* this bear market has run its course, it may be my number one non-TSP fund to recommend. It includes the largest 100 companies listed on the NASDAQ exchange. Its earnings growth beats all the other broad indexes hands down.
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Posted by: Michael Bond <michaelhbond@yahoo.com>
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Neither the TSP Strategy group, nor individual members, are licensed or authorized to provide investment advice. Any statements made herein merely reflect the personal opinions of the individual group member. Please make your own investment decisions based upon your personal circumstances.
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