Thrift board considers adding new fund to savings plan

The Federal Retirement Thrift Investment Board agreed Monday to study adding a new fund to the 401k-style Thrift Savings Plan.

The new fund, described by TSP Director Gary Amelio as a lifestyle fund, would be based on a participant's tolerance to investment risk, with styles ranging from very conservative to very aggressive.

"Generally a lifestyle fund is a fund of funds," Amelio said during an August interview with Government Executive. "A lifestyle fund would be professional asset allocation, and they are set up usually for the investment style of the participant."

For example, younger TSP participants who would not need retirement money for many years, might choose an aggressive investment mix for their "lifestyle fund." Under this strategy, the bulk of their money would be invested in stock or equity mutual funds. The remainder might go to fixed assets, such as bond funds, and stable value funds, such as a money market fund.

"You, as the participant, know your style, so you just go into the one fund and invest your assets, then you leave it to the professional money mangers to continually reallocate among the funds," Amelio said. "For example, the money manager might decide . . . instead of holding 8 percent in international [stock funds], at some point they might go up and hold 15 percent in international and they are continually doing that based upon outside market forces. That way you are really getting professional money management inexpensively."

The TSP currently offers five funds-the G, F, C, S and I funds. The C Fund invests in stocks of large companies, the F Fund invests in bonds, the G Fund invests in government securities, the S Fund invests in small- and mid-sized companies and the I Fund invests in international stocks. The lifestyle fund would be the first addition to the federal retirement investment plan since the debut of the S and I funds in May 2001.