TSP funds: stocks slip, safe funds hold

Wednesday's official TSP close was a down day for stock funds and a flat one for the safe ones.

The C Fund fell 1.16% to $107.4959. That was the only 1-day move over 1% in the lineup. It is now down 2.37% over five days but still up 15.93% for the year.

The S Fund lost 0.95% to $100.1772. The one-day drop was smaller than the C Fund's, but its five-day loss of 2.86% is the biggest of any fund. Its year-to-date gain of 10.82% trails the other stock funds.

The I Fund slipped 0.65% to $54.0314, down 0.97% over five days. Its 28.86% year-to-date gain is still the best in the TSP by a wide margin.

The F Fund was essentially unchanged at $20.8517 (-0.01%), and the G Fund edged up 0.01% to $19.5565. Neither one pays much attention to a stock selloff, which is the point of them.

Why the funds line up with their benchmarks

The C Fund follows the S&P 500, which also dropped 1.16%. The match is exact, as it should be. The S Fund tracks smaller and mid-size companies outside the S&P 500, and it fell in the same direction. The I Fund follows international stocks outside the U.S. and China, and it fell less than U.S. large caps. The F Fund follows the broad U.S. bond market and barely moved, while the G Fund pays a Treasury-based rate and ticks up a hair most days.

The L Funds are blends of those five funds, so their results depend on how much stock each one holds. L 2055 through L 2070 all fell 0.94%. L 2040 fell 0.68%, L 2030 fell 0.55%, and L Income, the most conservative, fell 0.25%. The further the target date, the more stock, and the bigger the loss. The long-dated funds are down 1.93% over five days.

What moved the IRA index funds and ETFs

The index figures I have are labeled as the prior session close. The S&P 500's 1.16% drop matches the C Fund's, so the picture is consistent.

The S&P 500 closed at 6,721.43, down 1.16%. The Nasdaq Composite fell harder, down 1.81% to 22,693.32. The Dow held up best, losing 0.47% to 47,885.97. When the Nasdaq falls well past the S&P and the Dow falls well short, the weakness was concentrated in the growth-heavy end of the market.

Among common IRA building blocks, VTI (total U.S. stock market) dropped 1.09% to $330.71. VXUS (total international) lost 0.66% to $74.96, in line with the I Fund. BND (total U.S. bonds) slipped 0.03% to $74.24. The 10-year Treasury yield sat at 4.151%, up 0.05%, so the bond market stayed calm while stocks sold off.

What it means for your plan

A 1.16% drop in the C Fund is a noticeable red number, but it is not unusual for the stock market. Even after this week's slide, the C Fund is up nearly 16% for the year and the I Fund is up almost 29%.

If you hold a Lifecycle fund or a diversified IRA mix, the bond and G Fund portions did what they were built to do today, which is stay put. If you are a few years from retirement, that cushion matters more than any single day's headline.

One day rarely matters for a plan built over decades. Check that your contributions are on schedule and your allocation still fits your timeline, then let the plan work. This is a general market recap, not personal advice.