March 26, 2014

The L Funds are about to be tweaked.

According to an announcement posted on

Updated Lifecycle fund allocations — (March 26, 2014) As a result of changes in long-term capital market assumptions and a review of the Lifecycle fund asset allocations, the TSP has revised the target asset allocations of the Lifecycle funds.

The announcement then directs users to the L Fund page to see the “current asset allocations” for each of the funds.

When I checked the fund allocations, however, I didn’t see anything different in the allocations from what they were previously.

I compared the L 2040 fund as it stands today, March 26 (see the early 2014 holdings), with my discussion of the fund in TSP Investing Strategies (see page 45). They are exactly the same. In short, in 2005 when the fund was created, the allocation was 85% in the stock funds (42% in the C Fund, 18% in the S Fund, and 25% in the I Fund) and 15% in the bond funds (5% in the G Fund and 10% in the F Fund).

Fast forward to mid-2035, and the fund is split 50-50 between the stock and bond funds – 27% in the C Fund, 8% in the S Fund, 15% in the I Fund, and 43% and 7% respectively in the G and F Funds. These are exactly the same today as when I wrote about them in 2011.

So I guess we’ll have to wait a bit to see what the updated L Fund allocations will be.

On a separate note, the L Funds might be renamed from their current “Lifecycle Funds” designation.

According to the minutes of the February FRTIB meeting (see “L Fund Naming Options), the objective in a name change would be to “potentially…better communicate the nature of the fund.” One name TSP administrators have floated is “Lifecycle Strategies.”

I’m kind of partial to the term “Strategies” myself, for obvious reasons, but I’m not sure if this concisely reflects the goal of the L Funds. The meaning gets a little muddled, since “strategies” suggests a series of steps to consciously follow to attain a certain goal. But the benefit of the L Funds is the convenience – there are no strategies to follow, it’s set and forget. Plain and simple.

Which is what any name should be – plain, simple, and concise.

Also worth noting is the cost involved in changing the names. It’s kind of a big deal when you think about it. After ten years of using the term “L Funds,” there’s a certain cranial muscle-memory to it. The change would entail a re-education campaign (sounds sinister, doesn’t it?), changing all references to “L Funds” on the site and in pamphlets etc., and staff time necessary to achieve this.

I would be willing to bet that the estimated $500,000 or so in cost is actually low – but it’s something all of us participants would have to pay for.

Come to think of it, maybe changing the name isn’t such a good idea after all…

Related topics: l-funds tsp-updates