TSPers Move to G Fund

Mar 1 3:09 AM



#2082 Mar 1 3:09 AM

�� What did many Feds do in response to the large drop in stocks?

��They looked at their accounts and switched to the G and F funds.

TSP activity increases following stock market plunge

By Amelia Gruber


February 28, 2007

Investors in the government's 401(k)-style retirement savings planshowed some signs of shaky nerves after the steep drop in the Dow Jonesindustrial average Tuesday.

The Thrift Savings Plan Web siteexperienced increased traffic as participants checked their accounts,and the number of transfers among funds processed Tuesday night reachedthe fourth-highest level so far this year, said TSP spokesman TomTrabucco.

The TSP processed 12,627 interfund transfers overnight, Trabucco said.Though that is well short of the highest number of transfers in 2007 --16,393 on Jan. 3 -- it is still a "pretty big number," he said, notingthat there tend to be more transfers at the beginning of the year,because it is a standard time for participants to reallocate theirinvestments.

Most of the transfers Tuesday night represented movement out of thethree basic TSP stock funds and into the less risky G and F funds,which invest in government securities and fixed-income bonds.

Participants took $200 million out of the I Fund, which invests ininternational stocks. The fund closed at $22.67 Tuesday, down $0.74from the previous close and up 0.71 percent for the month. Investorstook about $109 million out of the C Fund, which tracks the Standard& Poor's 500 Index of stocks in the largest domestic companies. Itclosed at $15.53 Tuesday, down $0.55 from the day before and 2.51percent for the month.

They also transferred about $109 million out of the S Fund, whichinvests in small- and mid-sized companies by tracking the Dow JonesWilshire 4500 Index. It finished Tuesday at $19.24, down $0.65 from theprevious day and 0.57 for the month.

Of the total amount moved out of these funds, about $370 million wentto the G Fund, which did not change Tuesday and was up 0.34 percent forthe month, and about $49 million flowed to the F Fund, which changedvery little Tuesday and was up 1.71 percent for the month.

TSP officials, however, recommended against shifting money in response to short-term market fluctuations.

"We always advise participants to have a long-term investment horizonand to stick with that plan over the long term," Trabucco said.

Plan participants who are uncomfortable with the movement in themarkets should consider placing their money in the life-cycle (L)funds, which invest in a mix of the basic funds that grows moreconservative as employees near retirement age, he said.

Trabucco expects activity to remain elevated Wednesday. He saidinvestors may have trouble logging on to their accounts on the TSP Website, and if they do, they should try the TSP's toll-free phone number:877-968-3778.

As of Wednesday afternoon, the markets were rebounding somewhat. TheDow Jones was up about 0.7 percent after a more than 3 percent dropTuesday, and the S&P 500 was up about 0.8 percent, also on theheels of a more than 3 percent plunge. Tuesday's decline -- thesteepest in about four years -- was precipitated by a drop in Chinesestocks.

This document is located at www.govexec.com/dailyfed/0207/022807a1.htm

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