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TSP G vs F

sma3
in Fund Discussions
I have used the TSP G fund as my “cash cushion” especially valuable as it now pays about 3.8% with no risk.

As the yield is based on the average yield of all Treasuries over 4 years out, it is a unique investment and I find it hard to predict what will happen if and when the fed eventually cuts rates. I would think the yield will fall but slowly.

There is more chatter, even in some good paid investment newsletters, recommending increasing duration to lock in higher rates and cut reinvestment risk.

Any thoughts on how G Fund will preform vs F fund ( which is based on AGG)

Does anyone with a TSP account use one of the allocation services like TSPFolio?

Comments

  • yogibearbullyogibearbull
    TSP G Fund is a unique stable value (SV) fund that I track monthly here.

    TSP F fund is just the US total bond market (ETF AGG). "Total" is misleading because it's all investment-grade, so a true US TOTAL bond market is IUSB.

    Anyway, this is the classic debate now, with 1-2 Fed rate hikes pending. IMO, it may be time to gradually moving out on duration. Some are thinking that someone will ring a bell for the proper time, but it doesn't happen that way.
  • Derf
    I thought I heard the bells toll a few months back. Bought 3 T-notes, due ( 12/24 - 3/25 - 4/26 ) about 8.5% of portfolio. Paying 4.25%, 3.875%, & 3.75%.
    I didn't like the interest rate , but remembered it wasn't that long ago when I was happy to get 3% on 2 year CD. At this time I plan to alternate between short & long purchases as rollovers come in.
  • sma3
    Thanks to you both

    @Yogibearbull

    I have read your blog which is very helpful.

    While G Fund is unique, don’t you think it’s yield will fall more slowly as it averages the yields of treasuries with 4 plus duration?

    On the other hand, LT treasuries yields will fall as their prices go up when rates are finally cut, wont they?

  • yogibearbullyogibearbull
    @sma3, within the TSP, there isn't a m-mkt option, so G Fund has served that purpose admirably over time. It had nonzero rates when most m-mkt funds were hanging at 0.01% just to avoid breaking the buck, but now some m-mkts are paying better than the G Fund. So think of G Fund for keeping reserves to be deployed into F, C, S, I Funds.

    Are you using the brokerage window there to tap other funds?
  • sma3
    @yogibearbull

    are you referring to the other TSP funds?

    As they paid better than MMF I used my other retirement accounts for equites and stock funds.

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