Poll: TSP Mutual Funds

[Aitrus]

I'm curious: how many of our members plan to use the TSP Mutual Funds when the come online next month?

For those who haven't heard yet, the TSP is offering a new Mutual Fund option, and there will be a short window in which you can allocate some of your current TSP account dollars to any of the 5,000 Mutual Funds that will be available. At present, the total amount you can allocate a minimum of $10,000 up to a maximum of 25% of your total portfolio.

There are costs associated with this Mutual Fund option that will apply to only those individuals using the Mutual Funds. These costs are as follows:

- $55 annual fee to help ensure that the Mutual Fund program costs don't bleed over to non-Mutual Fund users.
- $95 annual maintenance fee, applied by the company contracted to manage the Funds.
- $28.75 per trade fee.
- Other fees and expenses applicable depending on which Mutual Fund is chosen.

There's other changes coming to the TSP, as well as a blackout period from 26 May - the first week of June, but that's material for another thread.

Looking forward to hearing what everybody's thoughts are on this. Personally, my answer is a No - the current TSP options are enough for my retirement goals.

[Scarfinger]

To get into a fund it will cost $178.75 which is 1.78% fee on $10,000. Then it will be $150 annual maintenance fee to stay in the fund which is 1.5% cost on $10,000. Plus you may have Fund fees which will be added to the maintenance fees and you could be pushing 2% cost basis on 10,000 investment which sounds crazy high to me.

It seems slightly better if you put 100,000 into the fund: 0.18% fee on $100,000 to get into the fund and then an annual 0.15% fee to stay in the fund *plus* Fund fees which could be in a range from .25% to 1.8% on top of the maintenance fees.

For me it comes down to fees and what you need the fund to do for you. The only reason for me to get into any of these funds would be: US large Value, US Small Value, International Large Value, International Small Value, REITS, and maybe Emerging markets. These would make them useful and potentially benefit our current fund choices.

Then you would have to figure out the true cost of these funds. My guess is that the Fees are going to be a deal breaker for me.

[pjwaite]

"About 80% of all actively managed U.S. stock mutual funds underperformed in 2021, according to S&P Dow Jones Indices." - Answers that question!

https://www.cnbc.com/2022/03/21/why-ind ... funds.html

[Scarfinger]

"About 80% of all actively managed U.S. stock mutual funds underperformed in 2021, according to S&P Dow Jones Indices." - Answers that question!

https://www.cnbc.com/2022/03/21/why-ind ... funds.html

If they had https://us.dimensional.com/ funds and or https://www.avantisinvestors.com funds, I would be very curious and more tempted to look into them with more vigor.

But, If these are actively managed funds, most likely this is a money grab. From our pocket to their bank accounts. This is sounding more terrible than I thought. A lot of people will think these funds are better and put their hard earned money in them. I may be putting the cart before the horse though. We really need to see the cost/fee structure of the funds themselves.

[RugbyLarry]

No exactly correct poll option for me. Not using the TSP mutual fund window. I use various different options outside of TSP, and will be moving most/all of my TSP elsewhere as soon as 59.5, but definitely at retirement.

[paul]

Keep it simple. If you want more funds and more trades you will have more complexity, more overhead, and therefore more fees. I lean towards a buy and hold strategy.