I Fund Question

This topic contains 3 replies, has 4 voices, and was last updated by  12squared 3 years ago.

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  • #18261

    Richard

    Is there a reason why you always have 15% in the TSP I fund? Since 2007, the C and S funds have almost always outperformed the I fund. With that being said, why should someone invest any TSP contribution to it?

    #18268

    Anne
    Participant

    Richard, If you look at updates from last summer, I believe you will find his rationale, however, I believe he said he was considering a change to I Fund recently.

    Personally, I think I fund currently has more upside now than does the C/S Funds based on several factors: strong dollar, decreasing earning estimates, correlation of our stock funds to price of oil and potential FED interest rate increases this year. I don’t think US economy is as strong as TS Paul’s position. I could be wrong, but I am uneasy with the current market and too close to retirement to take big hit like 2008-2009.

    #18269

    TS Paul
    Keymaster

    If you look at my July 2015 update, I explain why I believed moving a small amount to the TSP I Fund made sense (at least in my circumstances).

    The very basic nutshell is that markets almost always make their most dramatic gains early in the recoveries of the economies which they represent. That’s what we saw a few years ago in the TSP S Fund. Because the economies represented by the I Fund are still in that recovery phase, I believe there is a better opportunity for an outsized return there. But I am also cautious enough not to make too large a bet on that belief in my Thrift Savings Plan.

    Thanks for the question.

    The TSP Allocation Guide www.TSPallocation.com

    #18283

    12squared
    Participant

    I is the worst performing stock fund right now, compared with the C & S funds. On the basis of the ratios of share price, it has been losing value against C since May 2015 (blue curve in attached) . It has recently begun to lose ground to S (green curve) – nearly 5 percentage points in the past two weeks. S is also up 2% against C, from its low on 2/9.

    All in all, it appears that S is the most upwardly mobile of the three funds right now.

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