TSP continues success; memo details participant behavior

The Federal Retirement Thrift Investment Board held its monthly meeting on Monday morning, and their Director of External Relations, Tom Trabucco, updated Federal News Radio on where things stand after October.

First up, details of a memo from the Board's chief investment officer.

"It normally takes about 10 minutes or so to get through it, with querying back and forth, to understand right down to one hundredth of one percentage point how the investments are working and whether or not they are achieving their intended goal. That includes looking at things such as sampling techniques and fair valuation adjustments -- things that people normally would not pay much attention to in their everyday investments, because they're not fiduciaries for such a big plan."

Trabucco said the reports are also examined for the behaviors of participants, and Board members did take note of the fact that, over the last seven months or so, people have regularly been moving money out of the G fund and into the C,S, and I funds.

"It's unfortunate that that happens and Board members always comment on that, because, of course, the goal would be to have part of your money -- at least -- in those C,S, and I funds before these nice returns . . . but, nevertheless, it's always there. It's always human nature. When people start to see the returns there, they'll start to move money back in."

The market began its rebound in March, Trabucco said, and some funds (such as the F) have seen eight positive months of returns.

"We did have a down month last month for the C,S, and I, but that seems to have turned around already in November. So, we're back ahead of the game. We haven't recouped all of the losses from the late 2007 to 2008 period, but we're well on our way. So, for people who had a long term investment and stuck with it, they're in great shape right now."

Trabucco added, however, that there still might be a struggle for those who moved their money around in an attempt to anticipate the changes in the markets.

More positive news involved record participation in the L -- or lifecycle -- funds. There are currently 631,869 participants who now have some or all of their money there, according to Trabucco.

"We continue to strongly encourage L fund use, and it seems to be finding a willing audience out there. This is probably because people have been through what they've been through over the last 18 months."

He added that the 2010 L fund will retire at the end of next year, and the 2050 fund will be instituted.

As far as the end of this year goes, Trabucco said participants should look for notices about contribution limits and other topics in the weeks ahead.

For more about your pay & benefits, visit Mike Causey's Federal Report page.