Thrift Savings Board Report

[FundSurfer]

July 2007 Highlights: (my comments in parenthesis with -FS)

Noted that participants engaged in increased trading in June. I-fund traded at $2 billion. Belief is that participants are chasing returns and noted that such activity confirms the importance of the lifecycle funds which are designed to prevent participants from engaging in such trading. (Prevent?? It won't prevent trading. It will help those that do not manage their own accounts is all I see...-FS) Percentage of participants engaging in this activity low, only 6 percent.

L-fund accounts for nearly 8% of all TSP assets.

TSP participants survey on the way soon to statistically significant sample of participants. Hopeful to have results by year end. (LET US KNOW IF YOU GET SURVEYED AND WHAT THE SURVEY ASKED. - FS)

REITS briefly discussed. Board reviewed recent Heritage Foundation article. (Heritage Foundation article -FS) Chairman of board noted key componenent of this discussion would be the survey.

Budget is currently running 4% below forecast.

That was it for July meeting.

TSP Board minutes

[Wheels]

Great post FS.
I found a couple of things interesting in the minutes. It's nice to know that they are making a concerted effort to keep costs low (a successful effort no less).

It's also interesting that they want to hear what we have to say about the REIT situation, especially since we know Amelio's feelings on the topic. (It says the survey will go out by the end of September, I hope I get one). While I welcome more choices, I share their concern that any group can lobby congress and ultimately get a fund added against the TSP board's will.

I also found it interesting that the number of TSP participants that "trade" is being tracked by them, and that it is up to 6% (the last time I saw a statistic on this it was less than 300 members out of roughly 4 million).

[FUTURESTRADER]

hopefully the stats from survey will show that the 'traders' are outperforming the L funds. At least maybe the top 10% of that 6% traders (based on TSPTalk tracker are we?); could provide very interesting results.

[Wheels]

Noted that participants engaged in increased trading in June... Belief is that participants are chasing returns and noted that such activity confirms the importance of the lifecycle funds which are designed to prevent participants from engaging in such trading.... Percentage of participants engaging in this activity low, only 6 percent.

One more note. Of the roughly 50 people on our Tally list that have been tracked all year, roughly 32 are ahead of the C fund while only 18 are below. Sounds like our group is doing O.K. without the L funds. I wonder if we are statistically a good sampling of that larger 6% group.

[Wheels]

Oops, looks like FUTURES and I had the same idea at the same time.

[FUTURESTRADER]

i've noticed that about us, wheels....'great minds' and all...looks like about 30 of the 75 folks on tracker are outperforming L2040 ytd. or am I missing something?

[rokid]

Pogo,

Which article are you referring to?

[pogo]

yeah that's the one it also has to do with leaving your children the money to.

[FundSurfer]

Link to minutes

3,646,000 TSP participants. Rate of FERS participation 85.7, CSRS rate is 67.3%.

Board is waiting for a full years experiance with L-funds before considering asking congress to make the L-funds the TSP default fund. There was sentiment that the TSP should at least offer features available in private plans and thus the board should go ahead and seek legislation authorizing automatic enrollment with L-funds as default. There was discussion of problems with letting people opt out and expenses TSP would incur as a result. It was noted that it was too late this legislative session anyway. Staff will report after survey completed.

Watson Wyatt will conduct the participant survey and due date set for December 15. Survey will be done by mail and 20,000 participants will be surveyed.

[FundSurfer]

Link to Minutes

Ms. Ray pointed out that participants transferred
$620 million to the L Funds in August. Several Board members
commented on this positive trend. Ms. Moran pointed out that
the recent upsurge could be due not only to the continuing success
of the L Funds but also to the L Fund reminder letter that
was recently sent out. Mr. Sanchez remarked that it was interesting
that members of the uniformed services were participating
in the L Funds at a higher rate than members of either CSRS or
FERS. Mr. Amelio commented that this was likely because we had
posted so much information about the L Funds on the TSP web
site, and, since members of the uniformed services tend to be
younger than other TSP participants, they are likely to use the
web site to a greater extent.

Board had approved a budget of $89.4 million for FY 2006, but that the Agency had expended only $83.4 million. Agency staff had been reduced from 91 to 69 and this accounted for some of the savings. ...four years ago ... the Agency expended approximately $100 million... the administrative fee to participants had been six or seven basis points four years ago ...that we have reduced that charge by one basis point per year. The charge will be four basis points this year and should be three, or even two, next year.

...the Agency was considering asking participants who access their accounts via the web whether they would like e-mail notification of TSP developments.

...He then remarked on the general trend of TSP participants away from the G Fund into the higher risk equity funds. He expressed concern that if market valued declined, that the Agency would not have enough personnel to assist participants and to assuage concerns. He asked whether it would be prudent to add several members to Agency staff to monitor speculative funds so that if market conditions worsened they could assist participants and prevent a mass exodus from the TSP. (What do you thinkthey mean by this?) Mr. Amelio replied that the Agency was planning six to seven targeted hires (about a ten percent increase) and noted that the use of technology had allowed for the recent reductions in staff.

Chairman Saul then asked if Mr. Duffy was expressing concern over a seismic event in the markets. Mr. Duffy stated that his interest was in ensuring that participants stay in the TSP and are not scared out. He remarked that the Agency needs a large enough staff to make sure participants know, even if such an event occurred, staying in the plan over the long term is still in their best interest. (Birchtree Jr.??)

The report included the end of year budget appendix and participation graphs. Lots of fun reading, especially if you have trouble sleeping at night. This will solve that problem.

[ChemEng]

Perhaps hes talking about retirees taking a lump sum instead of an annuity? Or maybe lots of people taking out loans against their account to protect its current value? Those are obviously guesses. But Ill agree that its an odd statement.

[SkyPilot]

I wonder how anxious the TSP board would be to make the L accounts the default if the year was 2002?

I think it is now the TSP board who is unrealistic and euphoric. There will be another market decline. It can and will happen again, someday. The L - funders who do not take an active involvement in their accounts WILL take the hit.

I am greatly concerned that by promoting the L funds as "cruise control" people will be led to beleive they have little or no risk.

Cruise control is fine, until you come to a cliff...