Meet the I fund
You’ll have two new Thrift Savings Plan investment options starting in May. Here’s an introduction to one of them. Plus, special patent pay and benefits talk.
The C Fund has long been the favorite investment option for federal employees enrolled in the Thrift Savings Plan, the government's 401k-style retirement plan. The C Fund tracks the performance of the S&P 500, a popular index that includes stocks of big companies in important industries. The S&P 500, and therefore the C Fund, had returns of investment of between 20 percent and 40 percent from 1995 to 1999. But in 2000, the value of C Fund investments dropped more than 9 percent, a result that sent some risk-averse federal employees running for the G Fund. The G Fund is the low-return and low-risk TSP option that invests in government securities. It has never posted an annual loss; the G Fund has averaged a 7.23 percent annual return. If you're an investor who thinks the C Fund is too much of a roller coaster for your retirement investments, then wait until you see the new I Fund's past performance. The I Fund debuts in May as one of two new investment options for TSP participants. The I Fund tracks the Morgan Stanley Europe, Australasia and Far East (EAFE) index, which comprises stocks from 20 developed foreign countries. The EAFE countries are Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and United Kingdom. (The Vanguard Group offers an explanation of how the EAFE index works online here. The table below shows that the EAFE index has been historically more volatile than the C Fund.
Annual Returns | ||
Year | C Fund |
EAFE Index (I Fund) |
1988 | 11.84 | 28.27% |
1989 | 31.03 | 10.50% |
1990 | -3.15 | -23.60% |
1991 | 30.77 | 12.20% |
1992 | 7.7 | -12.20% |
1993 | 10.13 | 32.70% |
1994 | 1.33 | 7.80% |
1995 | 37.41 | 11.30% |
1996 | 22.85 | 6.10% |
1997 | 33.17 | 1.60% |
1998 | 28.44 | 20.10% |
1999 | 20.95 | 26.70% |
2000 | -9.14 | -14.20% |