March 11, 2013
When it comes to asset allocation among the TSP funds, it is interesting to take a look at where others are putting their money in aggregate.
According to official stats, the TSP reached $330 billion in total assets at the end of 2012, which was 10% higher than in January when the TSP first surpassed $300 billion in assets. This growth includes additional contributions through the year (participants contributed a net total of around $12 billion in 2012), and the growth particularly of the stock funds.
In aggregate as of the end of December, 43% of TSP assets are invested in the G Fund, 8% are invested in the F Fund, 23% in the C Fund, 7% in the S Fund, and 5% in the I Fund.
Another 14% of total assets are invested in the various L Funds, ranging from the L Income Fund to the L 2050 Fund. The large majority of L Fund assets are invested in the 2020, 2030, and 2040 funds. (The single largest L Fund is the 2040 fund, with which makes up about 320,000 of the 821,000 total L Fund accounts.)
These three L funds have the majority of their underlying assets in the stock funds – from 65% to 78% in the case of the 2040 fund.
Thus in total, TSP participants have just over half of their assets in the G and F Funds, and the remainder in the stock funds – with most of those in the C Fund, and around 5% in the S and I Funds.
While these are aggregate figures for all TSP assets, a portfolio similarly divided among these funds would be a well-balanced allocation for the conservative investor. While some TSP participants put their entire assets in one fund – the G Fund, for example, or the C Fund – these single-fund strategies do not provide the flexibility to take advantage of declines in the stock market (in the case of the C Fund) or to enjoy the long-term growth potential of the stock funds (in the case of the G Fund).
For additional allocation strategies for moderate and aggressive investors – as well as strategies to determine your personal risk tolerance and to take advantage of funds during market declines – see TSP Investing Strategies: Building Wealth While Working for Uncle Sam.