New era for TSP "I" Fund?

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Darwin
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New era for TSP "I" Fund?

Post by Darwin » Tue Sep 11, 2018 11:15 pm

As of January 1st the TSP "I" Fund will be very different from what it has been before... Specifically, more comprehensively International (I).
Given the very low fees that go along with the TSP, (and the soon-to-be reasonable TSP International plan), it makes me rethink placing my allotment of International in my not-quite-as-cheap (Vanguard) Roth and taxable. I'm thinking about keeping the (extremely opposite) G and I funds as the "safe bond" vs "equity growth" funds in TSP for now. Eventually, over the years, I assume the G will push the I towards the (Vanguard) Roth again as equities inevitably gain momentum in my overall AA.
Any thoughts? I love differing views, they save me stupid mistakes...
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motorcyclesarecool
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Re: New era for TSP "I" Fund?

Post by motorcyclesarecool » Wed Sep 12, 2018 5:04 am

Here’s what I wrote in another thread:
You might want to continue investing your international allocation outside the TSP at Fidelity.
motorcyclesarecool wrote:
Sun Aug 05, 2018 10:24 am

As noted in a monstrous thread, Fidelity has just started offering a Total US Stock Market fund and a Total International Stock Market find, both with an expense ratio of 0%, and both with a minimum investment of $0. Fidelity makes its money on the funds by loaning securities to short sellers. I imagine they also hope to upsell their customers later on.

According to this page:
https://www.fidelity.com/mutual-funds/i ... ndex-funds
Fidelity has the TSP’s expense ratio of 0.033% beat across the board. With the notable exception of the G-fund, (I don’t care about the L-funds) I have zero reason to remain with the TSP after separation from service.

FZROX 0.0% < 80%C & 20%S 0.033%
FZILX 0.0% < I 0.033%

FUSVX 0.015% < C 0.033%
FSITX 0.025% < F 0.033%
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nps
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Re: New era for TSP "I" Fund?

Post by nps » Wed Sep 12, 2018 5:22 am

Darwin wrote:
Tue Sep 11, 2018 11:15 pm
As of January 1st the TSP "I" Fund will be very different from what it has been before... Specifically, more comprehensively International (I).
Do you have a source for that date? I have not yet seen a specific calendar day cited for the planned index change.

rkhusky
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Re: New era for TSP "I" Fund?

Post by rkhusky » Wed Sep 12, 2018 6:38 am

nps wrote:
Wed Sep 12, 2018 5:22 am
Darwin wrote:
Tue Sep 11, 2018 11:15 pm
As of January 1st the TSP "I" Fund will be very different from what it has been before... Specifically, more comprehensively International (I).
Do you have a source for that date? I have not yet seen a specific calendar day cited for the planned index change.
+1 The news stories I've seen all indicate that it will happen some time in 2019. And my guess is that it will slowly transition over a number of months.

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Darwin
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Re: New era for TSP "I" Fund?

Post by Darwin » Wed Sep 12, 2018 7:23 am

rkhusky wrote:
Wed Sep 12, 2018 6:38 am
nps wrote:
Wed Sep 12, 2018 5:22 am
Darwin wrote:
Tue Sep 11, 2018 11:15 pm
As of January 1st the TSP "I" Fund will be very different from what it has been before... Specifically, more comprehensively International (I).
Do you have a source for that date? I have not yet seen a specific calendar day cited for the planned index change.
+1 The news stories I've seen all indicate that it will happen some time in 2019. And my guess is that it will slowly transition over a number of months.
The newsletter I read recenty just indicated" "after January 1st", though that could mean a gradual shift. Would make sense to make that large of a change over time.
No planet, no business. Earth bats last.

stan1
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Re: New era for TSP "I" Fund?

Post by stan1 » Wed Sep 12, 2018 7:31 am

They are recompeting the I Fund management contract with the MSCI All World (ex US) index so that contract will need to award first and then there will be a transition period since there is $47 billion dollars under management in the I Fund. Once the contract is awarded I think there will be a better estimate of when in 2019 it will happen.

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jadd806
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Re: New era for TSP "I" Fund?

Post by jadd806 » Wed Sep 12, 2018 8:00 am

Darwin wrote:
Tue Sep 11, 2018 11:15 pm
it makes me rethink placing my allotment of International in my not-quite-as-cheap (Vanguard) Roth and taxable.
To answer your question rather than debate the particulars of the I Fund change:

If you can do this without creating a taxable event, go ahead. If the bulk of your international is in your taxable account you're going to have some difficulty.

It only saves you about 7 basis points to hold the I Fund compared to Vanguard Total International Admiral Fund, or $70 per $100k invested in international stocks. So I wouldn't go too crazy about it and I definitely wouldn't incur any taxes to make the change.

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Darwin
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Re: New era for TSP "I" Fund?

Post by Darwin » Wed Sep 12, 2018 10:12 pm

jadd806 wrote:
Wed Sep 12, 2018 8:00 am
Darwin wrote:
Tue Sep 11, 2018 11:15 pm
it makes me rethink placing my allotment of International in my not-quite-as-cheap (Vanguard) Roth and taxable.
To answer your question rather than debate the particulars of the I Fund change:

If you can do this without creating a taxable event, go ahead. If the bulk of your international is in your taxable account you're going to have some difficulty.

It only saves you about 7 basis points to hold the I Fund compared to Vanguard Total International Admiral Fund, or $70 per $100k invested in international stocks. So I wouldn't go too crazy about it and I definitely wouldn't incur any taxes to make the change.
Absolutely. Luckily, there's no tax hit. TSP is (by definition) in 401k, and my Vanguard International is in a Roth along with Total Stock.
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Topic Author
Darwin
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Re: New era for TSP "I" Fund?

Post by Darwin » Wed Sep 12, 2018 10:17 pm

stan1 wrote:
Wed Sep 12, 2018 7:31 am
They are recompeting the I Fund management contract with the MSCI All World (ex US) index so that contract will need to award first and then there will be a transition period since there is $47 billion dollars under management in the I Fund. Once the contract is awarded I think there will be a better estimate of when in 2019 it will happen.
Thanks for the tip, I'll monitor that until they actually change the system. Right now the number of world economies represented is rather limited, so I've avoided it.
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Crisium
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Re: New era for TSP "I" Fund?

Post by Crisium » Thu Sep 13, 2018 9:45 am

Keep in mind this index does not cover any small-caps.

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Re: New era for TSP "I" Fund?

Post by MnD » Thu Sep 13, 2018 11:20 pm

Crisium wrote:
Thu Sep 13, 2018 9:45 am
Keep in mind this index does not cover any small-caps.
The new I fund index (hence the thread title) will certainly cover small caps.
https://www.msci.com/documents/10199/f2 ... 7dcc44536c
The MSCI ACWI ex USA Investable Market Index (IMI) captures large, mid and small cap representation across 22 of 23 Developed
Markets (DM) countries (excluding the United States) and 24 Emerging Markets (EM) countries. With 6,462 constituents, the index covers
approximately 99% of the global equity opportunity set outside the US.
Decision here page 4 bottom. https://www.frtib.gov/MeetingMinutes/2017/2017Nov.pdf

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Re: New era for TSP "I" Fund?

Post by Crisium » Fri Sep 14, 2018 7:36 am

Oh that's good to hear.

I thought it was this, which is what my 401k international benchmarks:
https://www.msci.com/documents/10199/86 ... 29ed5adbbf

I still have a pittance in my TSP so I'm looking forward to the change from EAFE.

texasdiver
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Re: New era for TSP "I" Fund?

Post by texasdiver » Fri Sep 14, 2018 3:49 pm

So has anyone done a back-cast to compare the performance difference between these two different benchmarks over the past 10-20 years?

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Re: New era for TSP "I" Fund?

Post by WanderingDoc » Fri Sep 14, 2018 4:32 pm

MnD wrote:
Thu Sep 13, 2018 11:20 pm
Crisium wrote:
Thu Sep 13, 2018 9:45 am
Keep in mind this index does not cover any small-caps.
The new I fund index (hence the thread title) will certainly cover small caps.
https://www.msci.com/documents/10199/f2 ... 7dcc44536c
The MSCI ACWI ex USA Investable Market Index (IMI) captures large, mid and small cap representation across 22 of 23 Developed
Markets (DM) countries (excluding the United States) and 24 Emerging Markets (EM) countries. With 6,462 constituents, the index covers
approximately 99% of the global equity opportunity set outside the US.
Decision here page 4 bottom. https://www.frtib.gov/MeetingMinutes/2017/2017Nov.pdf
Great to hear! With about $8K per year is going into the I fund, about time its going to be a useful fund :)
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Re: New era for TSP "I" Fund?

Post by Jeff Albertson » Tue Sep 18, 2018 8:53 pm

FWIW,
The Thrift Savings Plan acted on Monday to have its automatic pilot investment funds steer a more aggressive course.
Following a consultant’s recommendation, the TSP will shift the investment mixes in its “lifecycle” funds, what it calls L Funds, more toward stocks. The goal is to “improve outcomes for existing L Fund participants while not unreasonably increasing risk levels,” according to a summary that the TSP staff presented to the program’s governing board.
...
However, effective immediately, the percentages of stocks in the 2030, 2040 and 2050 funds will be frozen at their current levels. That will continue for a number of years until those percentages match the levels they would have reached had they started with a more aggressive profile of about a tenth more in stocks.
https://www.washingtonpost.com/politics ... rd-stocks/

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Re: New era for TSP "I" Fund?

Post by ishkadetto » Tue Sep 18, 2018 10:58 pm

https://www.washingtonpost.com/politics ... rd-stocks/

Another interesting takeaway from that article is: "effective in January the TSP will increase from 30 to 35 percent the portion of each fund’s stock portfolio that is invested in the international stock fund."

This moves them closer to Vanguard's 40% international allocation for Target date funds.

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Re: New era for TSP "I" Fund?

Post by rkhusky » Wed Sep 19, 2018 6:35 am

The L Funds are ultra conservative and reach their terminal allocation of 20/80 on the target year. This compares to Vanguard's TR funds reaching 50/50 on the target year and their terminal allocation of 30/70 7 years after that.

Here is the announcement from the TSP web site:
Changes coming to the Lifecycle (L) Funds — (September 18, 2018) The TSP is planning adjustments to the L Funds in an effort to improve outcomes for participants who invest in them. Effective in January 2019, we will increase exposure to international stocks (the I Fund) from 30% to 35% in all L Funds. The L Income Fund stock allocation (C, S, and I Funds combined) will increase from 20% to 30% over a period of up to 10 years. The total stock allocation for the L 2030, L 2040, and L 2050 Funds will hold steady for a period of years to facilitate transition to the L 2060 Fund when it is introduced in 2020. Finally, at that time, the L 2060 Fund will begin with a 99% stock allocation.

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Re: New era for TSP "I" Fund?

Post by JamalJones » Tue Jan 22, 2019 2:22 pm

Darwin wrote:
Wed Sep 12, 2018 7:23 am
rkhusky wrote:
Wed Sep 12, 2018 6:38 am
nps wrote:
Wed Sep 12, 2018 5:22 am
Darwin wrote:
Tue Sep 11, 2018 11:15 pm
As of January 1st the TSP "I" Fund will be very different from what it has been before... Specifically, more comprehensively International (I).
Do you have a source for that date? I have not yet seen a specific calendar day cited for the planned index change.
+1 The news stories I've seen all indicate that it will happen some time in 2019. And my guess is that it will slowly transition over a number of months.
The newsletter I read recenty just indicated" "after January 1st", though that could mean a gradual shift. Would make sense to make that large of a change over time.
I still haven't been able to locate the the newsletter OP referred to...TSP Newsletter? There's nothing on the TSP site about the coming I fund change. There's no information in any recent newsletter. I understand the FRTIB approved the change to track the MSCI ACWI ex USA and that it will occur gradually sometime in 2019. But there's no new information on this? Is the change actually starting on Jan 1.?
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hoppy08520
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Re: New era for TSP "I" Fund?

Post by hoppy08520 » Tue Jan 22, 2019 4:34 pm

From respected Bogleheads MnD who follows the TSP closely, MnD wrote yesterday in a different thread:
MnD wrote:
Mon Jan 21, 2019 10:59 am
wassabi wrote:
Mon Jan 21, 2019 10:51 am
MnD wrote:
Mon Jan 21, 2019 10:43 am
Later this year you will be able to roll your own Total World at 53/47 or whatever it is then with TSP C, S and I for an overall ER of 0.03%, assuming the I fund contract holds to 0.03% at renewal. The I fund will be reconstituted later this year to track the MSCI all-country ex-US IMI index so the EM end ex-US small cap "gap" in the TSP will be removed. https://www.msci.com/documents/10199/f2 ... 7dcc44536c
I wasn't aware. Any idea when exactly this change will take place? I'm new to TSP but looking forward to utilizing the G Fund and potentially the I fund now. I have accounts at Vanguard to get the Total US Stock portion of my portfolio.
TSP is silent on this lately probably because they are recompeting the I fund 5-year contract now and have previously stated the I fund reconstitution will be part of the new contract. I expect a lot of details will be released at or just after when the new I fund contract is awarded.

I'd speculate that the "new" I fund when awarded will be tracking a transition index that will move from EAFE to All-country ex-US IMI over X months. Big funds don't make moves like this overnight. EAFE covers less than 60% of ALL-Country ex-US IMI so it's a big change for a $50 Billion fund.

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JamalJones
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Re: New era for TSP "I" Fund?

Post by JamalJones » Tue Jan 22, 2019 5:07 pm

hoppy08520 wrote:
Tue Jan 22, 2019 4:34 pm
From respected Bogleheads MnD who follows the TSP closely, MnD wrote yesterday in a different thread:
MnD wrote:
Mon Jan 21, 2019 10:59 am
wassabi wrote:
Mon Jan 21, 2019 10:51 am
MnD wrote:
Mon Jan 21, 2019 10:43 am
Later this year you will be able to roll your own Total World at 53/47 or whatever it is then with TSP C, S and I for an overall ER of 0.03%, assuming the I fund contract holds to 0.03% at renewal. The I fund will be reconstituted later this year to track the MSCI all-country ex-US IMI index so the EM end ex-US small cap "gap" in the TSP will be removed. https://www.msci.com/documents/10199/f2 ... 7dcc44536c
I wasn't aware. Any idea when exactly this change will take place? I'm new to TSP but looking forward to utilizing the G Fund and potentially the I fund now. I have accounts at Vanguard to get the Total US Stock portion of my portfolio.
TSP is silent on this lately probably because they are recompeting the I fund 5-year contract now and have previously stated the I fund reconstitution will be part of the new contract. I expect a lot of details will be released at or just after when the new I fund contract is awarded.

I'd speculate that the "new" I fund when awarded will be tracking a transition index that will move from EAFE to All-country ex-US IMI over X months. Big funds don't make moves like this overnight. EAFE covers less than 60% of ALL-Country ex-US IMI so it's a big change for a $50 Billion fund.
I guess I missed that post. Much appreciated, thank you!
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Re: New era for TSP "I" Fund?

Post by MnD » Tue Jan 22, 2019 5:13 pm

JamalJones wrote:
Tue Jan 22, 2019 2:22 pm
Darwin wrote:
Wed Sep 12, 2018 7:23 am
rkhusky wrote:
Wed Sep 12, 2018 6:38 am
nps wrote:
Wed Sep 12, 2018 5:22 am
Darwin wrote:
Tue Sep 11, 2018 11:15 pm
As of January 1st the TSP "I" Fund will be very different from what it has been before... Specifically, more comprehensively International (I).
Do you have a source for that date? I have not yet seen a specific calendar day cited for the planned index change.
+1 The news stories I've seen all indicate that it will happen some time in 2019. And my guess is that it will slowly transition over a number of months.
The newsletter I read recenty just indicated" "after January 1st", though that could mean a gradual shift. Would make sense to make that large of a change over time.
I still haven't been able to locate the the newsletter OP referred to...TSP Newsletter? There's nothing on the TSP site about the coming I fund change. There's no information in any recent newsletter. I understand the FRTIB approved the change to track the MSCI ACWI ex USA and that it will occur gradually sometime in 2019. But there's no new information on this? Is the change actually starting on Jan 1.?
I would be shocked if anything was happening to the I fund prior to the award of the next 5-year contract to manage the I fund and absent any public notice. The wheels of the FRTIB turn slowly but expect lots of news once the I fund management award is made.

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Re: New era for TSP "I" Fund?

Post by gtwhitegold » Tue Jan 22, 2019 5:57 pm

MnD wrote:
Tue Jan 22, 2019 5:13 pm
JamalJones wrote:
Tue Jan 22, 2019 2:22 pm
Darwin wrote:
Wed Sep 12, 2018 7:23 am
rkhusky wrote:
Wed Sep 12, 2018 6:38 am
nps wrote:
Wed Sep 12, 2018 5:22 am


Do you have a source for that date? I have not yet seen a specific calendar day cited for the planned index change.
+1 The news stories I've seen all indicate that it will happen some time in 2019. And my guess is that it will slowly transition over a number of months.
The newsletter I read recenty just indicated" "after January 1st", though that could mean a gradual shift. Would make sense to make that large of a change over time.
I still haven't been able to locate the the newsletter OP referred to...TSP Newsletter? There's nothing on the TSP site about the coming I fund change. There's no information in any recent newsletter. I understand the FRTIB approved the change to track the MSCI ACWI ex USA and that it will occur gradually sometime in 2019. But there's no new information on this? Is the change actually starting on Jan 1.?
I would be shocked if anything was happening to the I fund prior to the award of the next 5-year contract to manage the I fund and absent any public notice. The wheels of the FRTIB turn slowly but expect lots of news once the I fund management award is made.
I agree that it won't likely happen before the contract is awarded, but have you seen anything to indicate what the time line is for the contract?

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Re: New era for TSP "I" Fund?

Post by whodidntante » Tue Jan 22, 2019 7:15 pm

texasdiver wrote:
Fri Sep 14, 2018 3:49 pm
So has anyone done a back-cast to compare the performance difference between these two different benchmarks over the past 10-20 years?
I never learned that spell.

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Re: New era for TSP "I" Fund?

Post by JamalJones » Tue Jan 22, 2019 7:27 pm

texasdiver wrote:
Fri Sep 14, 2018 3:49 pm
So has anyone done a back-cast to compare the performance difference between these two different benchmarks over the past 10-20 years?
03/26/2008 to 01/21/2019: Less than $4.00? Wow. And the "old" index out performed.....

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

01/21/2009 to 01/21/2019: "New" index wins...

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
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Re: New era for TSP "I" Fund?

Post by gtwhitegold » Sat Feb 09, 2019 6:41 pm

JamalJones wrote:
Tue Jan 22, 2019 7:27 pm
texasdiver wrote:
Fri Sep 14, 2018 3:49 pm
So has anyone done a back-cast to compare the performance difference between these two different benchmarks over the past 10-20 years?
03/26/2008 to 01/21/2019: Less than $4.00? Wow. And the "old" index out performed.....

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

01/21/2009 to 01/21/2019: "New" index wins...

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
Not quite. ACWX tracks the MSCI ACWI ex US large / mid cap index. IXUS tracks the MSCI ACWI ex US IMI index which includes small caps. Which will be the index that the new TSP I Fund will use.

A link to the explanation for the change in the I Fund's index is below.

https://www.frtib.gov/ReadingRoom/InvBM ... Report.pdf

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Re: New era for TSP "I" Fund?

Post by travelogue » Tue Feb 12, 2019 8:07 am

Anyone have information on the timeline for competing I Fund management?

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Re: New era for TSP "I" Fund?

Post by azanon » Tue Feb 12, 2019 8:40 am

travelogue wrote:
Tue Feb 12, 2019 8:07 am
Anyone have information on the timeline for competing I Fund management?
I can't find where I originally saw it, but about a month ago or so I saw where Ravi Deo (TSP Executive Director) said that the transition for the I fund to the new benchmark won't be fully completed until ~ 2020.

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Re: New era for TSP "I" Fund?

Post by JamalJones » Tue Feb 12, 2019 7:28 pm

azanon wrote:
Tue Feb 12, 2019 8:40 am
travelogue wrote:
Tue Feb 12, 2019 8:07 am
Anyone have information on the timeline for competing I Fund management?
I can't find where I originally saw it, but about a month ago or so I saw where Ravi Deo (TSP Executive Director) said that the transition for the I fund to the new benchmark won't be fully completed until ~ 2020.
Not "sometime in 2019"?!? That sucks...
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Re: New era for TSP "I" Fund?

Post by rkhusky » Tue Feb 12, 2019 8:34 pm

Perhaps they will begin the transition in 2019 and it will end in 2020.

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Re: New era for TSP "I" Fund?

Post by gtwhitegold » Tue Feb 12, 2019 8:42 pm

It looks like the TSP may not award the contract until 2020 and will start the I Fund transition after that. Also of note, the TSP will be split between 2 different investment managers in the new contract.

https://www.pionline.com/article/201902 ... -the-limit

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Re: New era for TSP "I" Fund?

Post by stan1 » Tue Feb 12, 2019 9:28 pm

gtwhitegold wrote:
Tue Feb 12, 2019 8:42 pm
It looks like the TSP may not award the contract until 2020 and will start the I Fund transition after that. Also of note, the TSP will be split between 2 different investment managers in the new contract.

https://www.pionline.com/article/201902 ... -the-limit
New to me in this article is that they are hoping to split the management of each fund among multiple management companies. Blackrock (or its predecessor Wells Fargo) has been the sole management company since inception I believe. That adds some complexity that will add to the timelines.

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Re: New era for TSP "I" Fund?

Post by gtwhitegold » Tue Feb 12, 2019 9:39 pm

stan1 wrote:
Tue Feb 12, 2019 9:28 pm
gtwhitegold wrote:
Tue Feb 12, 2019 8:42 pm
It looks like the TSP may not award the contract until 2020 and will start the I Fund transition after that. Also of note, the TSP will be split between 2 different investment managers in the new contract.

https://www.pionline.com/article/201902 ... -the-limit
New to me in this article is that they are hoping to split the management of each fund among multiple management companies. Blackrock (or its predecessor Wells Fargo) has been the sole management company since inception I believe. That adds some complexity that will add to the timelines.
My idea is that it depends. If the assets are transferred in kind and other necessary measures are taken, then I don't believe that there will be too many issues, but you can't tell until it happens.

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Re: New era for TSP "I" Fund?

Post by fortyofforty » Tue Feb 12, 2019 9:54 pm

While I am glad the I Fund is going to include more of the world's stocks, I'm in no particular hurry for it to happen. Traditionally, the TSP makes changes relatively slowly and deliberately, which keeps costs very low and fad-jumping to a minimum.
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Darwin
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Re: New era for TSP "I" Fund?

Post by Darwin » Wed Feb 13, 2019 12:52 am

fortyofforty wrote:
Tue Feb 12, 2019 9:54 pm
While I am glad the I Fund is going to include more of the world's stocks, I'm in no particular hurry for it to happen. Traditionally, the TSP makes changes relatively slowly and deliberately, which keeps costs very low and fad-jumping to a minimum.
Works for me! I like having the option to use the improved I fund in the future, but only when my G fund investment becomes less than my bond AA (or when/if they take away the G-fund advantage). Meanwhile, plodding along as usual...
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Re: New era for TSP "I" Fund?

Post by azanon » Wed Feb 13, 2019 4:50 am

JamalJones wrote:
Tue Feb 12, 2019 7:28 pm
azanon wrote:
Tue Feb 12, 2019 8:40 am
travelogue wrote:
Tue Feb 12, 2019 8:07 am
Anyone have information on the timeline for competing I Fund management?
I can't find where I originally saw it, but about a month ago or so I saw where Ravi Deo (TSP Executive Director) said that the transition for the I fund to the new benchmark won't be fully completed until ~ 2020.
Not "sometime in 2019"?!? That sucks...
Nope not according to the interview of Mr. Deo i read. Sorry I couldn’t find the direct source I saw that at. Its on the net somewhere but I couldn’t find it again.

MnD
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Re: New era for TSP "I" Fund?

Post by MnD » Wed Feb 13, 2019 9:51 am

gtwhitegold wrote:
Tue Feb 12, 2019 8:42 pm
It looks like the TSP may not award the contract until 2020 and will start the I Fund transition after that. Also of note, the TSP will be split between 2 different investment managers in the new contract.

https://www.pionline.com/article/201902 ... -the-limit
So the new index for the I fund is linked to the new award for the I fund and the RFP will be out be end of 2019. It seems that the TSP is now able to make meaningful changes (for a couple decades that even that seemed like a bridge too far) but can only do one thing at a time, with the withdrawals project consuming most/all of 2019.

Historically its been 3 to 6 months from the issuance of the RFP for a TSP fund manager to the award date. So figure March to June 2020 until the award for the new I fund, and then a timeline for the transition and transition index from EAFE to ACWI-IMI ex-US which won't happen overnight. End of 2020 perhaps until the TSP I fund is at or close to tracking ACWI-IMI ex-US.

That works for me because I have the ACWI-IMI ex-US replicated with a mix of I fund and other holdings in various accounts, and having 2020 and even early 2021 perhaps to unwind the EM and small cap international funds elsewhere will be a bit cleaner and easier to manage.

MnD
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Re: New era for TSP "I" Fund?

Post by MnD » Wed Feb 13, 2019 10:13 am

Here we go - December 2018 FRTIB minutes.
15 month timeline for award of the new fund management contracts including the I fund (possibly sooner). So 15 months would be March 2020.
The transition to the I fund index should be concluded within 6 months of the award of the I fund contract. So sometime in 2nd half of 2020 until I fund is tracking MSCI ACWI ex-US IMI. If you take the 15 months + 6 months at face value I fund should be tracking new index by around September 2020.

https://www.frtib.gov/MeetingMinutes/2018/2018Dec.pdf
Mr. Mccaffrey provided an update on the use of external investment
managers, which included plans to implement the Board's directive to hire two
managers across each of the externally managed Funds. Mr. McCaffrey indicated his
team will assemble and release a Request for Proposals for this requirement, and has
drafted an approximately fifteen month schedule for the Agency to have the contracts
awarded, though, the goal is to award them sooner if possible.

Lastly, Mr. Mccaffrey stated the multi-manager effort, as it is known,
includes the I Fund. This means two things: 1) FRTIB will suspend previously
announced plans for the re-competition of the I Fund on a single manager basis
because that effort will be bundled with the multi-manager initiative. 2) The second
issue is that the planned transition of the I Fund benchmark from the MSCI EAFE Index
to the MSCI ACWI ex-US IMI Index was intended to be assigned with the new I fund
manager contract. That benchmark change will continue to await the assignment of a
new primary manager for the I Fund. As a result, the benchmark transition should be
concluded within 6 months of the new contract award, meaning the second half of 2020.

gtwhitegold
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Re: New era for TSP "I" Fund?

Post by gtwhitegold » Wed Feb 13, 2019 6:43 pm

MnD wrote:
Wed Feb 13, 2019 10:13 am
Here we go - December 2018 FRTIB minutes.
15 month timeline for award of the new fund management contracts including the I fund (possibly sooner). So 15 months would be March 2020.
The transition to the I fund index should be concluded within 6 months of the award of the I fund contract. So sometime in 2nd half of 2020 until I fund is tracking MSCI ACWI ex-US IMI. If you take the 15 months + 6 months at face value I fund should be tracking new index by around September 2020.

https://www.frtib.gov/MeetingMinutes/2018/2018Dec.pdf
Mr. Mccaffrey provided an update on the use of external investment
managers, which included plans to implement the Board's directive to hire two
managers across each of the externally managed Funds. Mr. McCaffrey indicated his
team will assemble and release a Request for Proposals for this requirement, and has
drafted an approximately fifteen month schedule for the Agency to have the contracts
awarded, though, the goal is to award them sooner if possible.

Lastly, Mr. Mccaffrey stated the multi-manager effort, as it is known,
includes the I Fund. This means two things: 1) FRTIB will suspend previously
announced plans for the re-competition of the I Fund on a single manager basis
because that effort will be bundled with the multi-manager initiative. 2) The second
issue is that the planned transition of the I Fund benchmark from the MSCI EAFE Index
to the MSCI ACWI ex-US IMI Index was intended to be assigned with the new I fund
manager contract. That benchmark change will continue to await the assignment of a
new primary manager for the I Fund. As a result, the benchmark transition should be
concluded within 6 months of the new contract award, meaning the second half of 2020.
This leads me to believe that fund management costs will increase for all of the externally managed funds and that the funds will not track their respective indices as well since Blackrock is arguably the best fund manager as far as their ability to track an index.

MnD
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Re: New era for TSP "I" Fund?

Post by MnD » Wed Feb 13, 2019 7:57 pm

gtwhitegold wrote:
Wed Feb 13, 2019 6:43 pm
This leads me to believe that fund management costs will increase for all of the externally managed funds and that the funds will not track their respective indices as well since Blackrock is arguably the best fund manager as far as their ability to track an index.
For the S&P 500 fund - is one company going to manage companies that start with the letters A-M and the other N-Z? :mrgreen:
Instead they need to figure out why Blackrock and their direct predecessors keeps winning these awards for 30 years now and maybe is the only bidder.

gtwhitegold
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Re: New era for TSP "I" Fund?

Post by gtwhitegold » Thu Feb 14, 2019 6:30 am

MnD wrote:
Wed Feb 13, 2019 7:57 pm
gtwhitegold wrote:
Wed Feb 13, 2019 6:43 pm
This leads me to believe that fund management costs will increase for all of the externally managed funds and that the funds will not track their respective indices as well since Blackrock is arguably the best fund manager as far as their ability to track an index.
For the S&P 500 fund - is one company going to manage companies that start with the letters A-M and the other N-Z? :mrgreen:
Instead they need to figure out why Blackrock and their direct predecessors keeps winning these awards for 30 years now and maybe is the only bidder.
Blackrock is definitely not the only bidder, but with the scale that Blackrock has, it's probably very hard to put in a more competitive bid. If I remember correctly, Vanguard has put in bids before for the TSP contract(s) and lost. This was primarily due to the fact that Blackrock has been splitting security lending revenues between the funds and themselves and thus being quoted as having lower expenses at least before security lending revenue.

carol-brennan
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Re: New era for TSP "I" Fund?

Post by carol-brennan » Thu Feb 14, 2019 6:51 am

ishkadetto wrote:
Tue Sep 18, 2018 10:58 pm
https://www.washingtonpost.com/politics ... rd-stocks/

Another interesting takeaway from that article is: "effective in January the TSP will increase from 30 to 35 percent the portion of each fund’s stock portfolio that is invested in the international stock fund."

This moves them closer to Vanguard's 40% international allocation for Target date funds.
Since the change will happen gradually, it also effectively puts at least the L Income fund on a "rising glidepath" and keep some of the other L funds stable rather than gliding toward the G.

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fortyofforty
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Re: New era for TSP "I" Fund?

Post by fortyofforty » Thu Feb 14, 2019 7:17 am

There are not a lot of companies with the capacity to manage asset collections of this size. If the competitive bidding process is fair, then I have no issues with Blackrock doing the job (although my heart is with Vanguard). Perhaps Fidelity would be another that could bid. In any case there is an independent board overseeing the process, so I remain relatively confident.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | There are many roads to doublin'. | Original Vanguard Diehard

gtwhitegold
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Re: New era for TSP "I" Fund?

Post by gtwhitegold » Thu Feb 14, 2019 8:11 pm

fortyofforty wrote:
Thu Feb 14, 2019 7:17 am
There are not a lot of companies with the capacity to manage asset collections of this size. If the competitive bidding process is fair, then I have no issues with Blackrock doing the job (although my heart is with Vanguard). Perhaps Fidelity would be another that could bid. In any case there is an independent board overseeing the process, so I remain relatively confident.
I'm not concerned in the least about it, but given similar expense ratios, I believe that Blackrock will outperform on a relative basis vs Vanguard and State Street due to a better security lending performance. However, that's not keeping me from investing with Vanguard or State Street.

Personally, I do believe that the TSP will keep Blackrock as an asset manager and one of the other 2 mentioned earlier or Fidelity as mentioned by fortyofforty will get the other half of the contract. I will only be surprised if it's an asset manager that's not really thought of as a index fund manager such as T. Rowe Price or Capital Research and Management.

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Darwin
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Re: New era for TSP "I" Fund?

Post by Darwin » Sun Feb 17, 2019 2:40 am

gtwhitegold wrote:
Thu Feb 14, 2019 8:11 pm
fortyofforty wrote:
Thu Feb 14, 2019 7:17 am
There are not a lot of companies with the capacity to manage asset collections of this size. If the competitive bidding process is fair, then I have no issues with Blackrock doing the job (although my heart is with Vanguard). Perhaps Fidelity would be another that could bid. In any case there is an independent board overseeing the process, so I remain relatively confident.
I'm not concerned in the least about it, but given similar expense ratios, I believe that Blackrock will outperform on a relative basis vs Vanguard and State Street due to a better security lending performance. However, that's not keeping me from investing with Vanguard or State Street.

Personally, I do believe that the TSP will keep Blackrock as an asset manager and one of the other 2 mentioned earlier or Fidelity as mentioned by fortyofforty will get the other half of the contract. I will only be surprised if it's an asset manager that's not really thought of as a index fund manager such as T. Rowe Price or Capital Research and Management.
As long as they're competent on an equal basis and win the contract, I'm on board.
No planet, no business. Earth bats last.

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fortyofforty
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Re: New era for TSP "I" Fund?

Post by fortyofforty » Sun Feb 17, 2019 9:15 am

Darwin wrote:
Sun Feb 17, 2019 2:40 am
gtwhitegold wrote:
Thu Feb 14, 2019 8:11 pm
fortyofforty wrote:
Thu Feb 14, 2019 7:17 am
There are not a lot of companies with the capacity to manage asset collections of this size. If the competitive bidding process is fair, then I have no issues with Blackrock doing the job (although my heart is with Vanguard). Perhaps Fidelity would be another that could bid. In any case there is an independent board overseeing the process, so I remain relatively confident.
I'm not concerned in the least about it, but given similar expense ratios, I believe that Blackrock will outperform on a relative basis vs Vanguard and State Street due to a better security lending performance. However, that's not keeping me from investing with Vanguard or State Street.

Personally, I do believe that the TSP will keep Blackrock as an asset manager and one of the other 2 mentioned earlier or Fidelity as mentioned by fortyofforty will get the other half of the contract. I will only be surprised if it's an asset manager that's not really thought of as a index fund manager such as T. Rowe Price or Capital Research and Management.
As long as they're competent on an equal basis and win the contract, I'm on board.
The management of the entire TSP program has been largely transparent. I dare say almost none of the people investing in the TSP knows who manages the funds. As it should be.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | There are many roads to doublin'. | Original Vanguard Diehard

gtwhitegold
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Re: New era for TSP "I" Fund?

Post by gtwhitegold » Sun Feb 17, 2019 12:32 pm

fortyofforty wrote:
Sun Feb 17, 2019 9:15 am
Darwin wrote:
Sun Feb 17, 2019 2:40 am
gtwhitegold wrote:
Thu Feb 14, 2019 8:11 pm
fortyofforty wrote:
Thu Feb 14, 2019 7:17 am
There are not a lot of companies with the capacity to manage asset collections of this size. If the competitive bidding process is fair, then I have no issues with Blackrock doing the job (although my heart is with Vanguard). Perhaps Fidelity would be another that could bid. In any case there is an independent board overseeing the process, so I remain relatively confident.
I'm not concerned in the least about it, but given similar expense ratios, I believe that Blackrock will outperform on a relative basis vs Vanguard and State Street due to a better security lending performance. However, that's not keeping me from investing with Vanguard or State Street.

Personally, I do believe that the TSP will keep Blackrock as an asset manager and one of the other 2 mentioned earlier or Fidelity as mentioned by fortyofforty will get the other half of the contract. I will only be surprised if it's an asset manager that's not really thought of as a index fund manager such as T. Rowe Price or Capital Research and Management.
As long as they're competent on an equal basis and win the contract, I'm on board.
The management of the entire TSP program has been largely transparent. I dare say almost none of the people investing in the TSP knows who manages the funds. As it should be.
I have no complaints from an execution standpoint, but I would have liked for some of the modernization efforts were implemented more swiftly. How long has a mutual fund window been under review? Are they going to implement in plan conversions? I know that some these were put on the back burner because of blended retirement system and other efforts, but those are the two that I'm prioritizing.

FedGuy
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Re: New era for TSP "I" Fund?

Post by FedGuy » Mon Feb 18, 2019 7:04 pm

gtwhitegold wrote:
Sun Feb 17, 2019 12:32 pm
I know that some these were put on the back burner because of blended retirement system and other efforts, but those are the two that I'm prioritizing.
I can't believe (well, I can, but barely) that they still haven't implemented two-factor authentication....

gtwhitegold
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Re: New era for TSP "I" Fund?

Post by gtwhitegold » Mon Feb 18, 2019 10:46 pm

FedGuy wrote:
Mon Feb 18, 2019 7:04 pm
gtwhitegold wrote:
Sun Feb 17, 2019 12:32 pm
I know that some these were put on the back burner because of blended retirement system and other efforts, but those are the two that I'm prioritizing.
I can't believe (well, I can, but barely) that they still haven't implemented two-factor authentication....
That's supposed to be in the pipeline now if I remember correctly.

Tdubs
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Re: New era for TSP "I" Fund?

Post by Tdubs » Sun Apr 14, 2019 3:34 pm

gtwhitegold wrote:
Mon Feb 18, 2019 10:46 pm
FedGuy wrote:
Mon Feb 18, 2019 7:04 pm
gtwhitegold wrote:
Sun Feb 17, 2019 12:32 pm
I know that some these were put on the back burner because of blended retirement system and other efforts, but those are the two that I'm prioritizing.
I can't believe (well, I can, but barely) that they still haven't implemented two-factor authentication....
That's supposed to be in the pipeline now if I remember correctly.
I just got asked today!

gtwhitegold
Posts: 398
Joined: Fri Sep 21, 2012 1:55 pm

Re: New era for TSP "I" Fund?

Post by gtwhitegold » Mon Apr 15, 2019 4:14 pm

Tdubs wrote:
Sun Apr 14, 2019 3:34 pm
gtwhitegold wrote:
Mon Feb 18, 2019 10:46 pm
FedGuy wrote:
Mon Feb 18, 2019 7:04 pm
gtwhitegold wrote:
Sun Feb 17, 2019 12:32 pm
I know that some these were put on the back burner because of blended retirement system and other efforts, but those are the two that I'm prioritizing.
I can't believe (well, I can, but barely) that they still haven't implemented two-factor authentication....
That's supposed to be in the pipeline now if I remember correctly.
I just got asked today!
2 Factor Authentication is supposed to be available now. I can try to validate and report back later.

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