Thread: Do any of the TSP funds hold mortgage backed securities?

No, they don't.

The Lehman Brothers U.S. Aggregate Index consists of high quality fixed-income securities with maturities of more than one year. The index is comprised of Treasury and Agency bonds, asset-backed securities, and corporate and non-corporate bonds. On December 31, 2005, the LBA Index included 6,453 notes and bonds. The average LBA Index coupon rate was 5.2%, which means that, on an annual basis, interest income equalled approximately 5.2% of the face value of the securities in the LBA Index. The average duration (a measure of interest rate risk) of the LBA Index was 4.5 years, which means that a 1% increase (decrease) in interest rates could be expected to result in a 4.5% decrease (increase) in the price of a security. New issues are added continuously to the LBA Index, and older issues drop out as they reach maturity.
Barclays U.S. Debt Index Fund — The F Fund is invested in the Barclays U.S. Debt Index Fund. Because the LBA Index contains such a large number of securities, it is not feasible for the Barclays U.S. Debt Index Fund to invest in each security in the index. Instead, Barclays selects a large representative sample of the various types of mortgage-backed, U.S. Government, corporate, and foreign government securities included in the overall index. Within each sector, Barclays selects securities that, as a whole, are designed to match important index characteristics such as duration, yield, and credit rating. The performance of the U.S. Debt Index Fund is evaluated on the basis of how closely its returns match those of the LBA Index. The F Fund invests in the Barclays U.S. Debt Index Fund by purchasing shares of the Barclays U.S. Debt Index Fund “E,” which in turn holds shares of the Barclays U.S. Debt Index Master Fund. As of December 31, 2005, F Fund holdings constituted $10.2 billion of the U.S. Debt Index Master Fund, which itself held $25.3 billion in securities.
http://www.tsp.gov/rates/fundsheet-ffund.pdf

Originally Posted by Fivetears

The Lehman Brothers U.S. Aggregate Index consists of high quality fixed-income securities with maturities of more than one year. The index is comprised of Treasury and Agency bonds, asset-backed securities, and corporate and non-corporate bonds. On December 31, 2005, the LBA Index included 6,453 notes and bonds. The average LBA Index coupon rate was 5.2%, which means that, on an annual basis, interest income equalled approximately 5.2% of the face value of the securities in the LBA Index. The average duration (a measure of interest rate risk) of the LBA Index was 4.5 years, which means that a 1% increase (decrease) in interest rates could be expected to result in a 4.5% decrease (increase) in the price of a security. New issues are added continuously to the LBA Index, and older issues drop out as they reach maturity.
Barclays U.S. Debt Index Fund — The F Fund is invested in the Barclays U.S. Debt Index Fund. Because the LBA Index contains such a large number of securities, it is not feasible for the Barclays U.S. Debt Index Fund to invest in each security in the index. Instead, Barclays selects a large representative sample of the various types of mortgage-backed, U.S. Government, corporate, and foreign government securities included in the overall index. Within each sector, Barclays selects securities that, as a whole, are designed to match important index characteristics such as duration, yield, and credit rating. The performance of the U.S. Debt Index Fund is evaluated on the basis of how closely its returns match those of the LBA Index. The F Fund invests in the Barclays U.S. Debt Index Fund by purchasing shares of the Barclays U.S. Debt Index Fund “E,” which in turn holds shares of the Barclays U.S. Debt Index Master Fund. As of December 31, 2005, F Fund holdings constituted $10.2 billion of the U.S. Debt Index Master Fund, which itself held $25.3 billion in securities.
http://www.tsp.gov/rates/fundsheet-ffund.pdf

Damn. Any idea what percent of the F fund is invested in these MBS? I have some of my TSP in the F-fund to provide diversification and reduce the risk, but maybe this is not a good idea anymore?

One must ask themselves, "Is it ever a really good idea to allocate to the F fund?”

While you can make this case from time to time in very specific situations, the F fund is inferior to the G fund as a safe haven, and inferior to the stock funds as a growth tool... risk with little reward potential.

Sky,

It's nice to see you engaged and posting again. It's been a long time since you posted your thoughts.

Originally Posted by SkyPilot

One must ask themselves, "Is it ever a really good idea to allocate to the F fund?”

While you can make this case from time to time in very specific situations, the F fund is inferior to the G fund as a safe haven, and inferior to the stock funds as a growth tool... risk with little reward potential.

But it's more fun then the G-Fund.

Originally Posted by Fivetears

The Lehman Brothers U.S. Aggregate Index consists of high quality fixed-income securities with maturities of more than one year. The index is comprised of Treasury and Agency bonds, asset-backed securities, and corporate and non-corporate bonds. On December 31, 2005, the LBA Index included 6,453 notes and bonds. The average LBA Index coupon rate was 5.2%, which means that, on an annual basis, interest income equalled approximately 5.2% of the face value of the securities in the LBA Index. The average duration (a measure of interest rate risk) of the LBA Index was 4.5 years, which means that a 1% increase (decrease) in interest rates could be expected to result in a 4.5% decrease (increase) in the price of a security. New issues are added continuously to the LBA Index, and older issues drop out as they reach maturity.
Barclays U.S. Debt Index Fund — The F Fund is invested in the Barclays U.S. Debt Index Fund. Because the LBA Index contains such a large number of securities, it is not feasible for the Barclays U.S. Debt Index Fund to invest in each security in the index. Instead, Barclays selects a large representative sample of the various types of mortgage-backed, U.S. Government, corporate, and foreign government securities included in the overall index. Within each sector, Barclays selects securities that, as a whole, are designed to match important index characteristics such as duration, yield, and credit rating. The performance of the U.S. Debt Index Fund is evaluated on the basis of how closely its returns match those of the LBA Index. The F Fund invests in the Barclays U.S. Debt Index Fund by purchasing shares of the Barclays U.S. Debt Index Fund “E,” which in turn holds shares of the Barclays U.S. Debt Index Master Fund. As of December 31, 2005, F Fund holdings constituted $10.2 billion of the U.S. Debt Index Master Fund, which itself held $25.3 billion in securities.
http://www.tsp.gov/rates/fundsheet-ffund.pdf

Well, it would appear that I was incorrect. Thanks for pointing that out and I apologize to the original poster for my incorrect information.

Good to be back... was attending to problems in the Antarian Nebula...

Originally Posted by sponsor

Sky,

It's nice to see you engaged and posting again. It's been a long time since you posted your thoughts.

Is the VIX screwed up again?? Heading up fast, already up more than 2%.

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General Inquiries
Phone: 415 597 2000
Fax: 415 597 2696
client.reporting@barclaysglobal.com

Originally Posted by titan3d

Damn. Any idea what percent of the F fund is invested in these MBS? I have some of my TSP in the F-fund to provide diversification and reduce the risk, but maybe this is not a good idea anymore?

Originally Posted by SkyPilot

One must ask themselves, "Is it ever a really good idea to allocate to the F fund?”

While you can make this case from time to time in very specific situations, the F fund is inferior to the G fund as a safe haven, and inferior to the stock funds as a growth tool... risk with little reward potential.

Bonds reduce portfolio risk. Decades of historical performance prove this.