TSP funds posted strong gains in June 2025, reflecting a robust market recovery. Here’s a breakdown of how the core and lifecycle funds performed.
- G Fund (Government Securities): gained 0.37%, with a year-to-date (YTD) return of 2.22% and a 12-month return of 4.42%, maintaining its stable, low-risk return consistent with its statutorily mandated rate tied to government securities.
- F Fund (Fixed Income): returned 1.54%, with a YTD return of 4.02% and a 12-month return of 6.07%, rebounding from May’s 0.71% loss, signaling improved bond market conditions.
- C Fund (Common Stocks): achieved a 5.08% gain, with a YTD return of 6.18% and a 12-month return of 15.11%, driven by the S&P 500’s strong performance, contributing to its 25% Q2 increase.
- S Fund (Small- and Mid-Size Businesses): led with a 5.40% return, with a YTD return of 2.11% and a 12-month return of 15.61%, reflecting robust small- and mid-cap stock performance.
- I Fund (International Stocks): posted a 3.73% gain, with a YTD return of 18.69% and a 12-month return of 16.91%, supported by international market strength and a weaker U.S. dollar, following May’s 4.97% return..
- Lifecycle Funds:
- L Income: 1.57%, benefiting from its conservative allocation (30.4% equities, 63.9% G Fund).
- L 2025: 1.45%, with assets transferred to L Income on June 27 due to its retirement.
- L 2030 to L 2070: Ranged from 3.00% (L 2030) to 4.62% (L 2065), reflecting their equity-heavy allocations, with higher returns for longer-dated funds (e.g., L 2055, L 2060, L 2065, L 2070 at ~4.61–4.62%).
- A new lifecycle fund, L 2075, launched on June 30 and is recommended for those planning to retire in 2073 or later.
Factors Influencing June Performance
Stock Market Recovery: U.S. stocks achieved a record-setting rebound, with the S&P 500 (C Fund) recovering 15% in 55 days after an 11% drop in April due to tariff policy concerns. A pause in reciprocal tariffs fueled this momentum, driving strong C and S Fund gains.
Economic Stability: Inflation nearing the Federal Reserve’s 2% target and strong economic growth boosted investor confidence, supporting equity funds (C, S, I) and stabilizing bond yields, which aided the F Fund’s positive return.
Policy Developments: The Supreme Court’s ruling against nationwide injunctions facilitated deregulation, creating a business-friendly environment that enhanced stock market performance, particularly for the C and S Funds.
Global Market Trends: A weaker U.S. dollar and proposed European defense spending increases bolstered international stocks, contributing to the I Fund’s solid 3.73% gain.
Federal Reserve Policy: The Fed’s decision to maintain short-term interest rates, citing a solid labor market and persistent inflation, ensured G Fund stability in the TSP and supported bond market improvements.
To make sure your TSP allocations match your risk tolerance and retirement timeline, get personalized advice from a Federal Retirement Consultant (FRC®) who understands your federal benefits.
