PERSONAL INVESTMENT PERFORMANCE
Q16. What is “Your YYYY Personal Investment Performance”?
The Personal Investment Performance (PIP) number is a combined rate of return earned on all of the funds you held in your TSP account during the year covered by the annual statement. Your personal performance is based on the performance of your investments and on the timing and amount of your purchases (e.g., contributions) and redemptions (e.g., loans and withdrawals) as well as the effect of any interfund transfers. Therefore, your personal performance may differ substantially from the performance of the investments themselves. Q17. How does the TSP calculate Personal Investment Performance?
The TSP uses the Modified Dietz method
to calculate Personal Investment Performance. The Modified Dietz method weights individual cash flows by the amount of time that those cash flows are held in the portfolio. This method of calculation is widely used by financial analysts and investment managers to measure the time-weighted returns of investment portfolios. Q18. All of my money was in one fund during the year covered by the annual statement. Why is my Personal Investment Performance different from the rate of return of that fund?
The Modified Dietz method of calculation is sensitive to large cash flows (e.g., loans, withdrawals, rollovers, or even contributions if the account balance is relatively small) and to volatility in the markets.
If you were invested in one fund, and only one fund, during the statement year, cash flows into or out of that fund could cause the PIP rate of return on your statement to be slightly different from the fund’s rate of return. Q19. Why doesn’t my annual participant statement show a Personal Investment Performance number?
If your TSP balance was $0 on the first or last business day of any month during the calendar year, an annual rate of return was not calculated, thus the Personal Investment Performance will not display on your statement. This particularly affects new and rehired participants.