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...

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%
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

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.

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.

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.

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.

MnD
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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

Crisium
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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?

WanderingDoc
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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 :)
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

Jeff Albertson
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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/

ishkadetto
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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.

rkhusky
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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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JamalJones
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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.?
TSP + Vanguard Roth IRA + Vanguard Taxable: 80% equities / 20% bonds | Yap, yap, yap, yap, - the bottom line is ya gotta buckle up the chin strap!

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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!
TSP + Vanguard Roth IRA + Vanguard Taxable: 80% equities / 20% bonds | Yap, yap, yap, yap, - the bottom line is ya gotta buckle up the chin strap!

MnD
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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.

gtwhitegold
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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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whodidntante
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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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JamalJones
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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
TSP + Vanguard Roth IRA + Vanguard Taxable: 80% equities / 20% bonds | Yap, yap, yap, yap, - the bottom line is ya gotta buckle up the chin strap!

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