TSP I Fund - Director asks board to add emerging markets and small cap int.

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MnD
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TSP I Fund - Director asks board to add emerging markets and small cap int.

Post by MnD » Sat Dec 02, 2017 10:44 am

:mrgreen:

This is great news for "own the whole market" types and for overall portfolio simplification although it will entail a significant amount of portfolio work and trading for DW and I. We have been adding EM and small cap international funds for many years to various accounts outside the TSP due to their exclusion from the I fund. Specific recommendation is to transition I fund from EAFE to to MSCI All Country World ex U.S.Investable Market Index. Slide presentation is really interesting. All the TSP funds indices were looked at. TSP is kind of on a roll lately as far as much-overdue improvements.

Article here:
https://www.fedsmith.com/2017/11/30/i-f ... posed-tsp/

Slide presentation on the analysis and recommendations here (a lot of good info)
https://www.scribd.com/document/3659717 ... ember-2017

Based on the study results, Ravindra Deo, the Executive Director of the FRTIB, said in a memo to board members that he was seeking their approval for the change in indexes for the I Fund. He said he felt the most appropriate time to initiate the transition would be during the next re-compete of the I Fund’s investment management which would be in the calendar year third quarter of 2018.

The memo said it was expected that the transition would take place over three to six months and be done no later than the end of the first half of calendar year 2019.

“Based on the study conducted by AHIC, including costs and other information provided in its written report and presentation with regard to transition related issues, we believe that it is appropriate to change the benchmark index for the I Fund,” wrote Deo.

“I am asking for the Board’s approval for the FRTIB to change the I Fund’s benchmark index to the MSCI ACWI ex – U.S. Investable Market Index from the current benchmark of the MSCI EAFE Index, to be executed by the single investment manager chosen with the next re-compete of investment management.”

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White Coat Investor
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Re: TSP I Fund - Director asks board to add emerging markets and small cap int.

Post by White Coat Investor » Sat Dec 02, 2017 11:06 am

It's a good change. Too late for me though. After 11 years of investing in the TSP, it has finally been filled with the G fund for me as I haven't made a contribution to it in 7 years and it has gradually become a smaller and smaller part of my portfolio. Maybe if I do some huge rollover into it at some point that'll change.

My problem is I now have to find something else to use in addition to the G fund for nominal bonds! Leaning toward the VG intermediate muni fund.
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Re: TSP I Fund - Director asks board to add emerging markets and small cap int.

Post by texasdiver » Sat Dec 02, 2017 1:43 pm

White Coat Investor wrote:
Sat Dec 02, 2017 11:06 am
It's a good change. Too late for me though. After 11 years of investing in the TSP, it has finally been filled with the G fund for me as I haven't made a contribution to it in 7 years and it has gradually become a smaller and smaller part of my portfolio. Maybe if I do some huge rollover into it at some point that'll change.

My problem is I now have to find something else to use in addition to the G fund for nominal bonds! Leaning toward the VG intermediate muni fund.
Happy to see this change.

I rolled all my traditional IRAs into the TSP and after changing jobs and relocating last year I rolled all my accumulated Vanguard 403(b) funds into the TSP. I haven't been a Fed since 2003 but it is still the bulk of my traditional (non-Roth) retirement savings due to all the rollovers.'

To think that I almost rolled everything OUT of the TSP into more "sexy" investments when I left Federal employment 15 years ago. Only inertia and busyness of a job and marriage saved me from that mistake. And also the fact that it all required actual paper transactions and wasn't something easily done online.

SR II
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Re: TSP I Fund - Director asks board to add emerging markets and small cap int.

Post by SR II » Sat Dec 02, 2017 1:49 pm

texasdiver wrote:
Sat Dec 02, 2017 1:43 pm
White Coat Investor wrote:
Sat Dec 02, 2017 11:06 am
It's a good change. Too late for me though. After 11 years of investing in the TSP, it has finally been filled with the G fund for me as I haven't made a contribution to it in 7 years and it has gradually become a smaller and smaller part of my portfolio. Maybe if I do some huge rollover into it at some point that'll change.

My problem is I now have to find something else to use in addition to the G fund for nominal bonds! Leaning toward the VG intermediate muni fund.
I rolled all my traditional IRAs into the TSP and after changing jobs and relocating last year I rolled all my accumulated Vanguard 403(b) funds into the TSP. I haven't been a Fed since 2003 but it is still the bulk of my traditional (non-Roth) retirement savings due to all the rollovers.
I did the same thing: rolled traditional IRA and previous 401k into TSP a year after I left Federal employment.

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sunnywindy
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Re: TSP I Fund - Director asks board to add emerging markets and small cap int.

Post by sunnywindy » Sat Dec 02, 2017 1:54 pm

That's great news for the I Fund. The EAFE Index seems to me as a relic from another time when world markets weren't as developed or liquid or accessible, etc... but, that is not the case anymore. Also great that they went with the IMI version of the ACWI index - it's now like you have VEU + VSS in one fund!
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MnD
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Re: TSP I Fund - Director asks board to add emerging markets and small cap int.

Post by MnD » Sat Dec 02, 2017 3:19 pm

sunnywindy wrote:
Sat Dec 02, 2017 1:54 pm
Also great that they went with the IMI version of the ACWI index - it's now like you have VEU + VSS in one fund!
That's the index Blackrock iShares Core MSCI Total International Stock (IXUS) uses.
Looks like Blackrock will be in a very good position to bid on the I fund versus Vanguard which is an FTSE shop for broad international funds including Total International Stock (VXUS). Not that Vanguard has ever shown any interest in managing TSP assets.

I wonder if they can keep the I fund at .03% ER. Retail products VXUS and IXUS are at .11%

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Re: TSP I Fund - Director asks board to add emerging markets and small cap int.

Post by Earl Lemongrab » Sun Dec 03, 2017 2:01 pm

That's similar to what Megacorp did some years back. Their previous international fund was EAFE, they switched to ACWI IMI. These days I don't use it because most of the 401(k) is taken up with fixed-income due to the raging bull market boosting the all-stock Roth and taxable accounts.
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Re: TSP I Fund - Director asks board to add emerging markets and small cap int.

Post by LadyGeek » Thu Dec 07, 2017 5:15 pm

FYI - The changes have been incorporated. See this thread: Thrift Savings Plan to Change I Fund Index

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