Comparing Fund Share Prices

THE THRIFT SAVINGS PLAN ALLOCATION GUIDE Forums Message Board Comparing Fund Share Prices

This topic contains 5 replies, has 3 voices, and was last updated by  MyTSP1 2 years, 9 months ago.

Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • #18461

    MyTSP1
    Participant

    Thank you for all your great information reflected on this site. Currently 100% of my TSP balance is invested in the S Fund. I would like to transfer at least 50% to the C Fund. As of COB today, one TSP share in the S Fund has a value of $34.8558 and one share in the C Fund has a value of $27.9977. Does the lower value per share of the C Fund compared to the S Fund mean if I transfer 50% of my balance right now from the S Fund to the C Fund, the total value of my TSP balance will decrease? I want to take advantage of the anticipated higher performance of the C Fund during 2016 but should I wait to actually make the transfer?

    #18466

    Anne
    Participant

    No. When you transfer from one fund to another, TSP calculate dollar amount at close of business and based on your percentage allocation it takes the total dollar amount X percentage to determine $$$$ in each fund; then they take the dollar amount and divides it by the closing share price to determine the number of shares.

    e.g. If you had $15,000 in TSP and went 50/50 with C & S, for simplicity assume C is at $10 and S is $15.
    Close of business account has 1000 share @ $15 = $15K
    50/50 gives you the following for total of $15K:
    C $7,500 = 750 shares x $10
    S $7,500 = 500 shares x $15

    #18467

    12squared
    Participant

    MyTSP1,

    Anne is correct in that you won’t lose $ the day you transfer. However, you might lose shares.

    Did you move from C to S at some time in the past? If so, switch back to C from S will result in more or less shares of C than you had originally, depending on the price ratio of the two funds. To get more shares, the price ratio of S/C needs to be higher now than it was when you went from C to S. However, you may not notice your share “loss” because it may be masked by rising share prices

    There is an example using the S and I funds in the “Switching lanes within the market” thread.

    #18485

    MyTSP1
    Participant

    Anne and 12squared: Thanks a lot for your thoughtful responses. It’s a relief to know the total value of my TSP won’t be affected.

    I have always been invested in either the G or S fund, so this would be the first time I move from S to C or vice versa. Do I understand your advice correctly that the gain or loss of shares won’t come into play until at some point in the future if I decide to move back from the C to the S fund?

    #18486

    12squared
    Participant

    Note the prices of S & C when you make the IFT. Divide the price of S by that of C to get the share exchange rate, i.e. the number of shares of C for each share of S. For example, as of April 7: $S = $34.49 $C = $27.72
    $S/$C = $34.49/$27.72 = 1.244, i.e. one share of S will buy 1.244 shares of C.

    Calculate it again before you switch from C to S to determine if you will have more or fewer shares of S than you do now. Ideally, you want S/C to go down, so that it takes less than 1.244 shares of C to buy one of S.

    The attached shows how the exchange rate between S & C has varied over the past 10 years. It also provides best and worst case examples that should demonstrate why the timing of an IFT between equities should not be arbitrary.

    Attachments:
    You must be logged in to view attached files.
    #18496

    MyTSP1
    Participant

    Thanks a lot 12squared. That’s a great explanation! Since the main strategy has more to do with the timing of the eventual move back from C to S, I understand better Anne’s initial answer (not to wait on my first IFT). I will therefore go ahead and make the IFT of 50% of total funds from S to C tomorrow.

Viewing 6 posts - 1 through 6 (of 6 total)

You must be logged in to reply to this topic.