Thrift Savings Plan Guidance for Federal Furlough

Last week the TSP (and its participants) paid for yet another 3rd party study, which yet again recommended adding more fund choices, which yet again the TSP will likely ignore.

This time, the 3rd party contractor’s study recommended the TSP add an Emerging Markets stock fund to the TSP product offering in order to add some flavor to the TSP’s Vanilla investment choices.

You know from being a GubMints reader that I’m not a Hater of the TSP.  But it’s too bad the TSP is paying for these studies and then ignoring their advice. TSP has done a pretty good job of Pareto-izing the fund choices within the TSP, using the fewest investment classes they can in order to get you wide market coverage:

  • Domestic Large Stocks = ‘C’ Fund,
  • Domestic Small Stocks = ‘S’Fund,
  • EAFE stocks = ‘I’ Fund,
  • Domestic Bonds = ‘F’ Fund,
  • Government Debt = ‘G’ Fund.

But we’ve been down this road before.  This same time last year the TSP ignored advice to modify the ‘I’ Fund to have complete overseas exposure (and not just EAFE index exposure).

I’m not asking for the TSP to offer a Royalty Trust ETF or the next Collateralized Debt Obligation Fund, but is it too much to ask for some more index choices? Why bother paying for another study when TSP is just going to ignore the advice and stick with its 5 Vanilla Funds?

GubMints recommendation: TSP should add a REIT index option and an Emerging Markets option in order to make the TSP a complete product offering at rock-bottom costs.

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