I Fund

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The I Fund (International Stock Index Investment Fund) is one of six investment offerings inside the Thrift Savings Plan, a contributory retirement program for United States federal employees, members of the uniformed services, and their beneficiaries.

Fundamentals

The I fund is an international developed market stock collective investment trust.[note 1] The fund tracks the Europe, Australasia and Far East (EAFE) index, which covers the stock markets of twenty-two developed countries.

On December 6, 2017, the TSP's governing board "at its most recent meeting accepted a recommendation by a consultant to switch to linking the I fund to the MSCI All Country World Index, which covers non-U.S. developed markets, smaller companies and emerging markets."[1] [2] In the November 28, 2017 meeting of the TSP Governing Board, it was stated: "The target date for the change would be some time in 2019,"[3] although the TSP stated at the end of 2018 that the switch would occur in the second half of 2020, due to timelines related to the assignment of a new fund manager contract for the TSP funds.[4][5]

Role in a portfolio

Until the I fund's index switches to the more diversified MSCI All Country World Index in 2020, the I Fund's does not have stocks from emerging markets, small caps, and Canada. TSP investors seeking to round out the gaps in the I Fund can consider the following:

  • To increase exposure to emerging markets, hold the I Fund and an emerging markets fund in their IRA, such as Vanguard Emerging Markets Fund.
  • To increase exposure to international small caps, hold an international small cap index fund in an IRA.
  • To increase exposure to Canadian stocks, which are 8.6% of Vanguard's Total International Stock Market Index Fund[6], hold a Canadian stock mutual fund or ETF such that tracks the MSCI Canada Index Fund such as EWC or Vanguard MSCI Canada Index ETF Fund (VCE)

Approximating Total International Stock Market contains more information for investors who would like to hold this combination of funds.

Or, they can place all of their international investments with Vanguard (e.g., in the Vanguard Total International Stock Market Fund).

Notes

  1. Technically, the I fund is a collective investment trust. The main practical differences between a collective investment trust and a mutual fund are:
    1. A collective investment trust has no ticker. An investor gets performance information about the fund from the fund administrator through performance reports and fact sheets.
    2. A collective investment trust does not distribute dividends or capital gains, but accumulates these incomes in the fund net asset value.
    The I fund's collective trust manager is BlackRock Institutional Trust Company, N.A. For more information regarding collective trusts, see Collective Investment Trusts

References

  1. "TSP to Change I Fund Index, Leave Others as Is". FEDweek. 2017-12-06. http://www.fedweek.com/fedweek/tsp-change-fund-index-leave-others/. Retrieved 2017-12-08. "The board at its most recent meeting accepted a recommendation by a consultant to switch to linking the I fund to the MSCI All Country World Index, which covers non-U.S. developed markets, smaller companies and emerging markets."
  2. Bogleheads® forum topic: Thrift Savings Plan to Change I Fund Index. 07 December 2017
  3. Federal Retirement Thrift Investment Board (2017-11-24). "Minutes of the Meeting of the Federal Retirement Thrift Investment Board Members, November 24, 2017". frtib.gov (PDF). https://www.frtib.gov/MeetingMinutes/2017/2017Nov.pdf. Retrieved 2018-01-25.
  4. Federal Retirement Thrift Investment Board (2018-12-27). "Minutes of the Meeting of the Federal Retirement Thrift Investment Board Members, December 27, 2108". frtib.gov (PDF). https://www.frtib.gov/MeetingMinutes/2018/2018Dec.pdf. "Lastly, [TSP CIO] 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."
  5. Croce, Brian. "For largest U.S. retirement fund, the sky's the limit". Pensions & Investments. https://www.pionline.com/article/20190204/PRINT/190209965/for-largest-us-retirement-fund-the-skys-the-limit. "By the end of 2019, the [Federal Retirement Thrift Investment] board will issue a request for proposal seeking two investment managers to manage a portion of each of the index funds, according to Kim Weaver, director of external affairs, [...] 'and a decision will be reached sometime in 2020', she added. Once the managers are selected, a change will be made to the TSP's I Fund — one of the index funds that invests in international equities — to incorporate emerging markets, Ms. Weaver said."
  6. Vanguard Total International Stock Index Fund Annual Report, 31 October 2011

External links