L funds daily rebalance

[mailmanusa]

I heard it said that the TSP rebalances the L funds on a daily basis. What does it mean in general to rebalance these funds? Are they buying and selling and that kind of stuff? Examples?

[SkyPilot]

I heard it said that the TSP rebalances the L funds on a daily basis. What does it mean in general to rebalance these funds? Are they buying and selling and that kind of stuff? Examples?

They re-allocate in an ever more conservative manner, i.e., less I fund, more G fund (for example) This is what I understand anyway. This also assures that they do not get too heavy in a particular fund due to gains or losses in that or other funds, so as to re-align the L-fund allocations to fit their model.

[mlk_man]

They rebalance the allocations quarterly. Just like every other fund, the share price of the particular L fund will be adjusted daily.

[mailmanusa]

I understand what you two have said but read this quote:

Because it is important for each L Fund to maintain its target investment mix, the TSP will automatically rebalance each L Fund daily. Then, each quarter, the investments in each L Fund will shift to a slightly more conservative mix.

Now doesnt that sound like something more?
They mention the quarterly shift in the same paragraph so this rebalance thing is something different. I dont think it means the price change of the fund. I could be wrong.

[mlk_man]

Looks like your right. I don't understand how they do it but as long as the daily share price doesn't get adjusted like the I fund does sometimes, I wouldn't really worry about.

I understand keeping the allocations close to what the initial goal is, but to do it daily seems a bit much and only increases the expense we ALL have to pay to do it.

[grandma]

I understand keeping the allocations close to what the initial goal is, but to do it daily seems a bit much and only increases the expense we ALL have to pay to do it.

Not only that - but doesn't that decrease the amt of shares you have in any one fund that may soar the next day? Doesn't that amount to `day trading' .... from which they discourage the rest of us of doing?
I don't understand the benefit of a daily re-allocation...........

Doesn't matter, I guess - :o they are out-performing me at the moment !!!