TSP'S I-Fund performance vs iShares MSCI EAFE ETF

[idevelopwe]

Can someone explain the difference between the performance of the TSP's I-Fund verses the iShares MSCI EAFE ETF.

Example: Yesterday, the I-Fund was down .31%, yet the iShares MSCI EAFE ETF was up .18%. That's almost a .5% difference.

[SoCal]

Many have tried, all have failed. It's a hard nut to crack.

[Jock14]

Can someone explain the difference between the performance of the TSP's I-Fund verses the iShares MSCI EAFE ETF.

Short answer is that the I-Fund is not the iShares MSCI EAFE ETF (EAFE), rather it is designed to mimic it. Likewise, the F-Fund is not a bond but does follow the bond market.

Longer answer (not necessarily better):
The reason a lot of people track that fund is that it's the best "live" updating fund to track the I fund with. The I-fund is updated only once a day not traded like the EAFE. There are things such as dividends, overnight trading, projections, currency value changes, and more that are taken into account with the I-Fund that keep it from following the exact changes of the EAFE. However, it will follow the long term trends as the makeup of the I-Fund is based on the EAFE.

Non-Direct answer:
The truth really is that we haven't been given enough direct information from the TSP board to exactly say the very specific differences, but this question comes up a couple times a year because of major differences in a day between the funds. Often you will see a couple of days of volatility, then it will adjust back together and follow fairly closely.

[Scarfinger]

The TSP I Fund (sometimes referred to as the TSP International Fund) tracks the MSCI EAFE Index which was created in 1969 to track the largest stocks in Europe, Australasia, and the Far East (EAFE). Back in 1969 when international investing was just becoming a reality, the dominant international markets were in Europe and Japan. Unfortunately for Thrift Savings Plan investors, the index hasn’t changed since it was created, and European markets still comprise about 70% of the index followed by Japanese markets at 22%, for a total of 92% of the entire index. Those are both still big markets, but they don’t have the growth of China, India, Brazil and the rest of the engines of global growth in the developing world which are completely excluded from the TSP I Fund. And to make things worse, the index tracked by the TSP I Fund includes such basket cases as Italy, Portugal, and Spain.

[MakeMe$$$$]

I've often read that there is some correlation between I fund performance and changes in the US dollar. Take that for what it is worth.

Over the long term the EAFA is reasonably close.