New Diversified Fund gets the official green light

[zarth]

FYI...

Looks like we'll have another fund to consider and discuss here sometime early next year. For those who don't like the (sometimes daily) shifting of their TSP account, nor monitoring their own diversification strategy....they will be able to let TSP do the diversifying for them. The TSP board is going to set upanother investment option --the Lifestyle Fund (L fund??) -- which will arrange the existing funds in conservative, moderate or aggressive investment structures and allow us to determine what level of risk we are willing to accept.

Read here: TSP readies for new investment fund (http://www.govexec.com/dailyfed/0404/041904d1.htm)

[Rod]

This sounds like it will be great.

What does everyone else think???

Also, what do you all think of the following quote from the article:

Amelio said also that some investors attempt to gain high yields by transferring their savings to better performing options. Those changes, however, usually come too late and investors end up missing valuable appreciation.

I often wondered if changing allocations often is a good thing since those changes do not immediately take affect.

Comments???

[tsptalk]

What does everyone else think???
I think it is nice that TSP is doing something to help us but a diversified fund doesn't really help me. If I want diversification, then I'd just spread my assets around into the different funds.


Amelio said also that some investors attempt to gain high yields by transferring their savings to better performing options. Those changes, however, usually come too late and investors end up missing valuable appreciation.

I'd say most uninformed investors do just that and that is why I created this site. They chase high flying markets and sell at the bottom. How many of you were in the G fund last year because of what happened in 2000-2002 while the stock funds were up 25% - 40%? Ugh!:shock: We try to buy low and sell high here. Buy the fear, sell the euphoria as I call it.


I often wondered if changing allocations often is a good thing since those changes do not immediately take affect.

I agree that changing a lot probably is not the greatest way to increase returns but good timing can. The fact that we can make a move by noon ET and be in the new funds the next day makes it pretty easy to make changes. It would be nice if the deadline was 4:00 PM like most mutual funds, but anything is a step up from the old system of once a month.

Have a good weekend!!

[Rolo]

Hmm...there was another L fund topic on here...

I do not like it because it raises the management fees for all of the funds in order to pay for it; we will be paying for something we are not using.

[Pete1]

I agree with Rolo on this one. Higher fees are a bad thing. TSP needs to do a better job of educating participants aboutthe existing funds and offering examples of how to allocate assets between theexisting funds.Currently, all of the funds have an expense ratio of .10, a remarkably good deal. I would hate to see the fees go up.

A REIT would have been nice or maybe a Small Cap international fund.

Hybrids have their place. I just do not think thatTSP is the place. Educate, Educate, Educate.

[Rolo]

There are likely limits to what they can do to educate, being that we are a terribly litigious society. "I lost money...'cos I should get it without working for it...I know...I'll sue!" I wanted to start an investment club with the family services finance guy at the base where I work, but legal tangles prevented it. "kill all the lawyers"

From the article:

"For simplicity's sake, for efficiency's sake, the cost of this project is going to be allocated across the plan," he said.


Efficiency? Government? Surely he jests.


Amelio said that in a best-case projection, about 10 percent of TSP investors are expected to join the life cycle plan in its first five years. TSP staff said this is comparable to the industry standard.


Again, 90% pay for the 10%. Nice.


Board members supported Amelio and said the plan was necessary to encourage participants to diversify. After reviewing TSP investment numbers, Thrift board member Alejandro Sanchez said the data backs Amelio's push for the life cycle funds.



They don't need a new fund to diversify, they can just send pamphlets! Also, data is plural!It should be "the data back Amelio's push".

"If there were any doubters out there," Sanchez said, "they're not doubting you anymore."



Gee, Sanchez, can you get that nose any further up his butt?



I don't suppose we elect these board members, eh?

[Pete1]

Arrgh.

[Rod]

One would think you would only be charged the L fund fee if you use the L fund.

[Rolo]

One would think. However, they are apparently taking the easy route.

[Mike]

As irritating as this is, we are still getting an extremely good deal with regards to the fees (or lack thereof) that we are paying... L fund or no L fund.

By the way, why don't they allow existing thrift contributors to have a say over this? As "shareholders", I think we deserve the opportunity to be heard on issues such as these, especially when they involve fee increases, whether or not one enters into this fund.

Maybe Fox should start a show called, "When good governments go bad"...

[Rolo]

Mike wrote:
Maybe Fox should start a show called, "When good governments go bad"...

Show? It could be a whole channel! Oh, wait, I think it is called "C-SPAN".

[snicker]

[Mike]

But where is the dramatic intro music?

[Rolo]

Wah-waaaAAAaaaaaaaaah.....

[pyriel]

Can anyone please tell me why would I want to get in the L fund when I can just spread all them through different funds? The only thing I can think of is laziness.

[fedex]

pyriel, I am a former fed, 17 years, but am now an employee of Oregon and our state retirement investment mix has 10 fund options with several short and long term bond funds, a balanced stock fund, a large value, small/mid value, etc.

I like the concept of the L fund as an alternative choice to hedge some other investment choices. Yes, it is for the more laissez faire investor (dare we say lazy) that is only looking for a choice someone else made for them. For years I was never completely satisfied with the G, F, and C options. I was thrilled with the additoin of S and I. I was already ina small cap value, a mid-cap value, and a midcap growth IRA outside the TSP. With C & S you have a large part of the equity market covered, but the L fund would offer more options in the mix as hedges to help cover your, ahem, bases.

fedex