I started this project for noobs, so don’t ever be shy about asking a question.
Large caps and small caps tend to move in unison, with small caps moving up more on the up days, and down more on the down days. For that reason, I don’t think you can hedge with the TSP C Fund. In this phase of the economic cycle we see more up days than down, and the overall result has been that the small caps (TSP S Fund) have outperformed the large caps (TSP C Fund) by 28% over the past three years.
So far this year the C Fund has outperformed the S Fund, but that is over a pretty short time period. My expectation is that the S Fund’s performance will surpass the C Fund over the long term, but there are no guarantees and this time could be the exception.