Bearing the brunt of a bear market

Monday - 11/3/2008, 4:40pm EST

By Dorothy Ramienski
Internet Editor
FederalNewsRadio

October is now gone and many who were watching their Thrift Savings Plan closely are breathing sighs of relief.

Tom Trabucco is Director of External Relations with the TSP and says October was a bit brutal when it came to losses in certain funds.

The G fund . . . posted a positive return in October of .31 percent. The F fund was down 2.4 percent, the C fund was down 16.83 percent, the S fund was down 20.99 percent, and the I fund was down 20.59 percent.

Trabucco says TSP participants should remember these are figures only for the month of October.

In addition, he says a the TSP almost broke a record when it came to people moving their funds around last month.

The total interfund transfers for the month of October [are] 267,000. Now that is not an all-time high number, but it's close . . . and in terms of dollars, which net, of course, moved to the G fund and out of all of the other funds -- the net transfer was $3.8 billion into the G fund.

Trabucco says last year's returns at this time were positive, though he didn't have specific numbers available at the time of his interview with FederalNewsRadio. Additionally, that positive trend had been the norm since 2003.

We've had a pretty good run here, really if you look back over the last 20 years. We put together three bad years in 2000, 2001, 2003 -- and those losses were pretty much up where we are right now, but prior to that we had 10 good years and then a bad year in the early '90's, but that was about it.

TSP participants are facing a bear market right now, which means losses of between 35 to 40 percent for the year.

We are right there. We are in the 35 [to] 45 range, depending on what fund you're in for the year. We really haven't had that since the '70's or early '80's. So we had a whole group of investors who are looking at a . . . bear market for the first time.

Trabucco says this had led to some nervousness and apprehension among many of the younger investors. During the past few years, the TSP took in over 600,000 members of the armed forces in addition to civilians.

We know that we've got a lot of FERS employees who are in here and those, by definition, are people who were hired after 1983, so at a maximum they've been working for 25 years, so they're probably in their mid-40's or approaching their early 50's. Those are the folks who will be looking at this and hopefully learning that, as they approach retirement, they want to make sure that they decrease their exposure to the stock market.

Trabucco says many of the people who are retiring now are still under the older system -- CSRS -- which means the TSP is not an integral part of their retirment. For FERS employees, however, the situation is different.

They [should] look for those last ten or 15 years of work prior to retirement at how much exposure they feel comfortable having as that date gets closer.

As always, you can track your TSP daily by going to FederalNewsRadio's homepage and looking at the Thrift Savings Plan Ticker.

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