In May 2025, the Thrift Savings Plan (TSP) experienced a significant upswing, particularly in its C Fund, which mirrors the S&P 500 index. Buoyed by favorable inflation reports and strong investor interest in technology stocks, the C Fund soared by 6.29%, its best monthly performance since November 2023’s 9.12% gain. After a tough start to the year with losses in February, March, and April, this May rally lifted the C Fund’s year-to-date return to 1.05% and its 12-month performance to a robust 13.47%. Notably, the S Fund, which tracks smaller companies, had previously outshone the C Fund in November 2023 with an 11.19% increase but played a less prominent role this time.
Bond funds within the TSP showed contrasting results. The G Fund, invested in unique U.S. Treasury securities, offers a steady monthly interest rate tied to Treasury yields with four or more years to maturity. Guaranteed by the U.S. government, it delivers consistent, positive returns, unaffected by market swings. In contrast, the F Fund, aligned with the Bloomberg US Aggregate Bond Index, saw a decline in May. Rising interest rates, with the 10-year Treasury yield reaching 4.418%, coupled with market turbulence from economic uncertainties and Federal Reserve actions, pushed bond prices down, impacting the F Fund’s returns.
These market movements unfold against a backdrop of growing national debt concerns. From January 2021 to January 2025, the federal debt ballooned by $8.4 trillion, the largest four-year increase ever recorded, prompting a downgrade of the U.S. debt’s triple-A rating. Hopes for debt reduction under President Trump are waning, as Congress debates extending tax cuts set to expire, which could further swell the deficit without corresponding spending reductions or new revenue sources.
May 2025’s TSP performance reflects a complex economic environment. The C Fund’s strong gains signal market optimism, while the F Fund’s struggles highlight vulnerabilities to rising rates. Meanwhile, the G Fund’s reliability offers a safe haven for TSP investors navigating an uncertain fiscal landscape.
- G Fund (Government Securities): 0.36% MTD, 1.85% YTD, 4.43% 12 Months
- F Fund (Fixed Income Index): -0.71% MTD, 2.44% YTD, 5.45% 12 Months
- C Fund (Common Stock Index): 6.29% MTD, 1.05% YTD, 13.47% 12 Months
- S Fund (Small Cap Stock Index): 7.21% MTD, -3.13% YTD, 9.58% 12 Months
- I Fund (International Stock Index): 4.97% MTD, 14.42% YTD, 10.89% 12 Months
It’s important to regularly assess your TSP allocations to ensure they align with your risk tolerance and retirement timeline. A Federal Retirement Consultant (FRC®) can help you tailor a strategy that fits your needs.
