Friday, October 10, 2008

The TSP Funds - "G", "F", "C", "S", " I "

There are five investment options that are available to the millions of federal employees:

  • Government Securities Investments. The "G" Fund is invested in very short-term U.S. Treasury securities (bonds) guaranteed by the federal government. These are unique government securities, backed by the full faith and credit of the US Government, available only through the G Fund. This is equivalent to a high-yield stable value fund, so there is no possibility of a loss of principal, and there is no risk of loss. As set forth by law, the interest paid by this fund is equal to the average rate of return on outstanding Treasury securities with four or more years to maturity. There is no ticker symbol for the G Fund.

  • Fixed Income Index Investments. The "F" Fund is invested in high quality securities (Barclay's US Debt Index Fund), which track the Lehman Brothers U.S. Aggregate (LBA) bond index. This index represents a diversified group of U.S. government, corporate and mortgage-related securities. It will also perform similarly to the Vanguard Total Bond Market Index Fund (ticker symbol: VBMFX). For tracking purposes, one can either use the Vanguard Total Bond Market Index Fund (ticker symbol: VBMFX) or the IShares Lehman Bond Index (ticker symbol: AGG). Through the G and F Funds, TSP participants with low risk tolerance can avoid the stock market entirely.

  • Common Stock Index Investments. The "C" fund (think "C" for common stocks) is invested in a portfolio of stocks (Barclay's Equity Index Fund) which track the stock market as a whole by replicating the performance of the Standard & Poor's 500 Index. Meaning, this fund invests in very-large-cap U.S. stocks. It will behave similarly to S&P 500 Index funds such as Vanguard 500 Index (VFINX). For tracking purposes, we will use the S&P 500 Large Cap Index (ticker symbol: $SPX).

  • Small Capitalization Stock Index Investments. The "S" Fund (think "S" for small stocks) is invested in a portfolio of stocks (Barclay's Extended Market Index) that replicates the performance of the Wilshire 4500 Index. These are the largest U.S. stocks and it does not include stocks of the S&P 500 Index. Meaning, it tracks the performance of the non-S&P 500 stocks in the U.S. market. The C and S Funds combined cover almost the entire U.S. stock market. This fund will perform similarly to the Vanguard Extended Market Index Fund (VEXMX). For tracking purposes, we will use the Dow Jones Wilshire 4500 Completion Index (ticker symbol: $EMW or $DWCPF).

  • International Stock Index Investments. The "I" Fund (think "I" for international stocks) is invested in a portfolio of stocks (Barclay's EAFE Index Fund) designed to track the performance of an index that represents the international equity markets. The board chose to mirror the Morgan Stanley EAFE Index, which tracks the large companies in 21 countries in Europe, Australia and the Far East. For tracking purposes, we will use the IShares MSCI EAFE Index Fund (ticker symbol: EFA).

Four of these, managed by Barclays Global Investors, are trust funds open only to tax-exempt employee benefit plans. These funds are not mutual funds and are not open to individual investors. As such, there are no tickers for the funds reported in the financial press.


For End of Day Tracking Purposes:

Fund Ticker Symbol
G none
F AGG
C $SPX
I EFA
S $EMW

No comments: