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Investing February 22, 2006
TSP Participants Chase International Returns
February 21, 2005 (PLANSPONSOR.com) - Participants
in the federal Thrift Savings Plan (TSP) are chasing hefty
returns in the international equity market by moving more of
their TSP assets into international funds.
Reported by Fred Schneyer
A govexec.com news report said that for the 12 months ending January 2006, employees in the older Civil Service Retirement System bumped up their international allocation in the TSP’s I Fund from 4% to 6%. Over the same time period, employees in the newer Federal Employees Retirement System moved from allocating 5% of investments to the I Fund to 8%.
The report said that for that time period, the I fund was the TSP’s top performer with a 22.91% advance.
The movement is also illustrated by interfund transfers, according to the govexec.com report. In January, participants added $753 million to the I Fund through interfund transfers. The I Fund was the only stand-alone fund to increase. By contrast, participants removed $1.2 billion from the C Fund, which invests in the stocks of the 500 largest domestic companies and had a 12-month growth of 10.4%.
TSP Chief Investment Officer Tracey Ray noted a $1.3 million trading cost for the I Fund in the month of January. That number was significantly higher than the next highest fund in trading costs, which was the S Fund at about $200,000.
Ray said the costs came because participants moving into the I Fund are “buying into an up-market, which is going to make it more expensive.”