stan1 wrote:Low interest rate climate has finally caught up with the G Fund.
"Finally"? The rate has been under 2% since late last year. It's one of the side-effects of being tied to longer Treasury rates. With those as low as they are, the G rate suffers as well. You also get much quicker changes, as the rate is recalculated monthly.
G under-performed inflation in 2011, and I suspect it will again for this year, but that's a temporary thing. It will likely in aggregate be in line with inflation.
The past couple of years have been unusual. Most of the time, G's rate is similar to middle of the pack stable-value funds. Starting early in 2011, there has been a divergence. The G rate is 1.375% for July. At MyMegaCorp the third quarter StV rate was set at 2.74% (a slight increase). That's the biggest difference I have seen between the two since I started comparing them a few years back. Historically the performance of the two has been nearly identical over the years.
Every year I get tempted to move off my 50/50 aggregate bonds/StV to raise the latter and "lock in" profits of the former. So far it would have been a mistake. At some point it won't.
If I only knew when . . .
Brian