TSP Returns Decline Amid Rising Interest Rates

The Thrift Savings Plan (TSP) saw its returns decline in September as interest rates hit their highest level since May 2002. The 10-year U.S. Treasury note climbed above 5.3% on the last day of the month, which contributed to the decline. Additionally, the Federal Reserve raised its benchmark short-term interest rate by a quarter of a percentage point to a range of 3.75% to 4.00%.

The S&P 500 index, on which the C Fund is based, declined 0.4% for the month. However, technology companies were the only part of the index to gain ground. The G Fund stood out as the only TSP fund with a gain in September, returning 0.40%. Every other fund, including all 11 L Funds, lost ground.

The F Fund, which owns bonds that trade in the open market, fell 2.59% and was its worst month since September 2022. The S Fund took the hardest hit with a 3.86% loss. The C Fund held up best, slipping just 0.35%. Despite this, the C Fund still leads every TSP fund at year-to-date returns.