Balancing Act

First, an apology; our servers were down earlier in the day, hence the lack of blogging. But we should be back to our regularly scheduled updates now.

Second, last week, I wrote in our Pay & Benefits column that TSP participants had the funds’ conservative allocation and market-tracking approach to thank for the fact that their losses were smaller than those of their counterparts in some major public employee pension funds that have seen their allocations actually get riskier during this period of market turmoil. But I was sitting in a meeting of the Federal Retirement Thrift Investment Board this morning, and I learned something new. It turns out, the allocations in the TSP Lifecycle 2010 fund, designed for investors who will retire in the next several years, is actually also more conservative than the allocation in some other comparable funds. As Tracey Ray, the TSP’s chief investment officer, put it:

Our income fund is 85 percent income and 15 percent equities. But that’s not a rule. That’s determined by the individual organization. Other organizations, maybe for marketing purposes, make their allocations more aggressive. We had a bull market for a long time. Other funds raise their equity allocations so they can compete with them.

Check back for more updates from the meeting later in the day.