Perspectives

Thrift Savings Plan (TSP) S Fund is Still the Best Performing Fund

Currently, the small capitalization stocks as seen in the Russell 2000 index are only now back to where they started the year, but the TSP S Fund’s mid-cap stocks are compensating enough to keep the index up this year.  The TSP C Fund (Orange) is the winner for 2014 over the TSP S Fund (Blue), but if we look at the long term picture we see a different picture.

TSP C and S Fund Chart

Taking one step back to the 2009 market bottom in equities, the TSP S Fund is the winner over the C Fund (S&P500 index) and the I Fund (International stock fund).  US small and mid-cap stocks have simply outperformed.

TSP Equity Fund Comparision

S Fund (Blue) C Fund (Orange) I Fund (Gray)

Taking another step back we see TSP S fund is the hands down winner since 2003 when TSP began publishing daily prices.  But also note the increased volatility of the S Fund.  While the small & mid-cap stocks that make up the S fund outperformed during the bull markets, they gave much of their gains back during the bear markets. 

S Fund (Blue) C Fund (Orange)  F Fund (Green)  G Fund (Gray)

S Fund (Blue) C Fund (Orange) F Fund (Green) G Fund (Gray)

It is important to remember that if one had invested in the S Fund at the market peak in 2007, your funds would have lost 57.5% at the market bottom.  Many buy & hold investors did not “hold” and sold at a significant losses near the bottom.  They then had difficulty knowing when to re-enter the market and from many indication the retail investor is once again buying and driving this market up.   History shows retail investors tend to have their highest exposure at market tops and lowest exposure at market bottoms.  Hopefully some investors will learn from history.  We are currently near the top of a strong, yet aged bull market, so caution is warranted going forward and reducing, not increasing exposure, might be wise.