Question - L Fund prices

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misfit
Posts: 252
Joined: Fri Apr 13, 2018 9:21 am

Question - L Fund prices

Post by misfit »

I was wondering if the price of the L funds were cheaper than buying C, S or I directly. I ask because I’m confused on the fund index prices. For example the L2045 price is very cheap in comparison at $11.88 per share and has apprx 40% going into C, 11% in S and 27% into I. That’s almost 80% going directly into stocks at a much cheaper price.

The C price currently is $62.08 per share, S is $66.92 and I is $31.94. Does this all even out based on the percentages of shares of each separate fund rolled into the L fund or is it actually cheaper to buy the L fund? I hope this makes sense.
Thanks everyone.

Price Day YTD

F $18.54 -0.05% -11.25%
C $62.08 1.54% -13.72%
G $17.03 0.01% 1.75%
F $18.54 -0.05% -11.25%
C $62.08 1.54% -13.72%
S $66.92 2.16% -19.80%
I $31.94 2.12% -19.01%
L2065 $12.47 1.81% -16.24%
L2060 $12.47 1.81% -16.23%
L2055 $12.47 1.81% -16.22%
L2050 $25.83 1.49% -13.97%
L2045 $11.88 1.40% -13.09%

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Scarfinger
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Joined: Mon Jan 30, 2012 12:00 am

Re: Question - L Fund prices

Post by Scarfinger »

I think you are looking at it wrong.

If you invest $100,000 and own 8417 shares in the L2045 or invest $100,000 and own 1494 shares of the "S" Fund. And say you invested in a hypothetical fund "X" with $100,000 for 1 share of the company?

What if they all went up by 10%? you would have $110,000 dollars in each fund. That wouldn't really happen because the Lfund is more diversified than the S Fund and well, 1 share is the least diversified that you could be. You are more likely to have grater gains and or greater losses in the 1 share of a company vs the "S" fund vs the Lfund because of the diversification factor. Also there are different factors like Large cap vs mid cap vs small cap involved. All things being equal, the only thing that would decrease your 10% gain would be the expense of the funds.

L2045 expense: 0.048%
"S" Fund expense: 0.059%
"X" Fund: unknown

A well diversified portfolio smooths out the losses and gains.

Maybe it would be possible for the 1 company "X" fund to gain 10% and the "S" Fund to gain 10% but the Lfund most likely wouldn't gain 10% simply because they have some bond funds ("F") and the "G" funds that wont keep up with gains in equities.

But vis versa the "X" and "S" fund would lose more than the Lfund because they don't have any bonds ("F" fund) or "G" fund.

In general I would buy a fund/stock on the cheap because I saw value in it meaning I thought that it would outperform a benchmark because it was undervalued and or oversold. I don't think you are going to get that type of dynamic/volatility with the Lfunds unless you are comparing them to other Lfunds, maybe?

The Lfund returns/losses will be based on their Bond to Equity percentages.

**The things you should consider
1. cost of the funds annual expenses
2. the diversification or your portfolio, i.e. US vs International, Large cap, mid cap small cap, bonds ect. based on your age and risk tolerance.

The main reason to invest in the Lfund is for simplification. One fund that rebalances as you get closer to retirement and it provides more diversification because the Lfunds invest in all 5 of the available TSP funds.

That is how I see it.. But, maybe I have it all wrong.
I am just an average Joe. I have no clue to what the market will do.
TimboSlice wrote: "People really need to stop overthinking this."
Paul Merriman 2 fund strat: (age - 25) x2.5 = TDF + balance into S fund or variation of

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misfit
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Re: Question - L Fund prices

Post by misfit »

Thanks scarfinger. However, Both funds below have Similar allocations in each fund yet a big difference in share price. This is what has me confused. I appreciate the input. Thanks

L2050 $25.25
L2045 $11.63

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Scarfinger
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Re: Question - L Fund prices

Post by Scarfinger »

misfit wrote: Tue Sep 13, 2022 8:29 pm Thanks scarfinger. However, Both funds below have Similar allocations in each fund yet a big difference in share price. This is what has me confused. I appreciate the input. Thanks

L2050 $25.25
L2045 $11.63
The only difference that I an see is that the 2030, 2040 and 2050 funds are much older around 17 years.
The 2035, 2045, 2055, 2060 and 2065 funds have an inception date of 7/1/2020.

My guess is compound interest over 2 years vs 17 years has caused the older accounts to have a higher cost per unit.
I am just an average Joe. I have no clue to what the market will do.
TimboSlice wrote: "People really need to stop overthinking this."
Paul Merriman 2 fund strat: (age - 25) x2.5 = TDF + balance into S fund or variation of

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12squared
Posts: 516
Joined: Thu Dec 31, 2015 7:28 am

Re: Question - L Fund prices

Post by 12squared »

The TSP starts all new funds at $10 regardless of the actual value of the underlying securities. After that the price changes based on the relative market performance.
“The genius of investing is recognizing the direction of the trend — not catching the highs or the lows.”
- Dean Witter

"You'll have to adapt or you'll be out of style."
- Robert Smith

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12squared
Posts: 516
Joined: Thu Dec 31, 2015 7:28 am

Re: Question - L Fund prices

Post by 12squared »

In June 2003 when the TSP went to daily price changes, it set the price of each fund at $10.00 per share. 19 years later, C, S & I had increased by 480%, 510% & 220% respectively. What I find interesting is that over the long term, G & F aren't that far apart - increasing only 69% & 89%.
“The genius of investing is recognizing the direction of the trend — not catching the highs or the lows.”
- Dean Witter

"You'll have to adapt or you'll be out of style."
- Robert Smith

User avatar
Scarfinger
Posts: 738
Joined: Mon Jan 30, 2012 12:00 am

Re: Question - L Fund prices

Post by Scarfinger »

12squared wrote: Fri Sep 16, 2022 8:58 am In June 2003 when the TSP went to daily price changes, it set the price of each fund at $10.00 per share. 19 years later, C, S & I had increased by 480%, 510% & 220% respectively. What I find interesting is that over the long term, G & F aren't that far apart - increasing only 69% & 89%.
Thanks for the statistics. Very interesting.
I am just an average Joe. I have no clue to what the market will do.
TimboSlice wrote: "People really need to stop overthinking this."
Paul Merriman 2 fund strat: (age - 25) x2.5 = TDF + balance into S fund or variation of

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Fund Prices2022-11-25

FundPriceDayYTD
G $17.17 0.02% 2.59%
F $18.31 0.13% -12.35%
C $61.66 -0.03% -14.29%
S $65.01 0.27% -22.09%
I $34.21 0.59% -13.27%
L2065 $12.68 0.23% -14.82%
L2060 $12.68 0.23% -14.81%
L2055 $12.68 0.23% -14.80%
L2050 $26.21 0.20% -12.70%
L2045 $12.06 0.19% -11.82%
L2040 $44.40 0.18% -10.84%
L2035 $11.84 0.17% -9.77%
L2030 $39.82 0.15% -8.62%
L2025 $11.55 0.11% -5.68%
Linc $22.97 0.08% -2.17%

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