[TSP_Strategy] Re: Switch to I Fund?

 

We discussed the I fund's historical performance previously. When large caps are bullish, and the USD is weak, it can't be beat.  see below message from January 19:

The I Fund has been in the news lately, and not in a positive way.  Some financial writers have been critical of the I fund for its lack of performance. This is hardly a shock since international stocks are currently underperforming after the long bull market American investors have been enjoying for much of this decade.

 

This is ridiculous.  One could also be "critical" of US stocks for last year's downturn at the start of the year.  Investments move equities.  Sometimes foreign stocks are in favor.  Sometimes US stocks are in favor. Sometimes, no stocks are in favor, as we saw early in 2016.

Investment researcher Lyn Alden recently wrote on her blog that the primary problem with the I Fund is its lack of diversification. She noted that it only follows developed countries and even then it is heavily concentrated in only five of those countries. (See the infographic below that she compiled which summarizes her concerns about the I Fund)

This is also ridiculous.  One could make the same argument of the C or S funds. The FRTIB chose the MSCI EAFE (I fund) for its stability.  It is a large cap fund of developed nations.

The principle of diversification is to spread your money around to limit risk. My foreign funds have never, in 35 years of investing [been the strongest of the funds in my portfolio]; it's the weakest of the four categories [that Ramsey recommends inside of a retirement account: growth, growth and income, aggressive growth, international]. Always; almost every year. It's to the point I'm so disgusted that I've even thought about, after 35 years, of changing the formula, but I'm not going to. But it's the one category that is just "blah;" it's not horrible – I don't lose money on them – but I'm just never excited about them. And I guess that's a good thing; it means the American economy is outperforming the other economies, in general

The I fund was initiated in 2001.  It was the strongest of the TSP funds in 2004, 2005, 2006, 2007, 2012.  The I fund is strong when large caps are strong and the USD is weak.  Period.

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Posted by: sarah_oz@yahoo.com

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Ditulis oleh: Andriansyah -