TSP Starts the Year in Positive Territory

All Thrift Savings Plan (TSP) funds posted positive returns in January 2026, giving federal employees a strong start to the year. International stocks led the way as global markets rallied, while U.S. equities and bond funds delivered more modest gains.

Among the core funds, the I Fund was the clear standout, benefiting from strong performance overseas. U.S. stock funds also advanced, with small- and mid-cap stocks outperforming large caps. Bond returns were positive but subdued, and the G Fund continued to provide steady, low-risk growth.

Lifecycle (L) Funds, which automatically adjust their mix of stocks and bonds over time, also finished the month higher. The L Income Fund, designed for retirees and conservative investors, returned 1.12% for January and posted a 12-month gain of 9.27%. More aggressive L Funds, such as L 2065, likely experienced stronger gains due to their heavier exposure to equities.

Core Funds

Long-Term Perspective on TSP Performance

Since its inception in 1987, the TSP has grown into one of the largest retirement plans in the world, with assets exceeding $900 billion. Its success is largely driven by ultra-low fees (approximately 0.034%) and a disciplined, passive investment approach; factors that have helped it compete favorably with many actively managed funds over time.

Historically, equity funds (C, S, and I) have been the primary drivers of long-term growth, though they can experience significant volatility. For example, the S Fund suffered losses of more than 30% during the 2022 market downturn. In contrast, the G Fund has never posted a negative year, offering principal protection and stability, albeit with lower long-term returns.

The F Fund can provide diversification benefits, but it tends to struggle during periods of rising interest rates. Over the past decade, U.S. large-cap stocks (C Fund) have led overall performance, while international stocks (I Fund) surged notably in 2025.

Lifecycle Fund performance varies widely based on risk level. Conservative L Funds have averaged closer to mid-single-digit annual returns over the long term, while more aggressive funds can deliver double-digit gains during strong equity markets.

As always, past performance is not a guarantee of future results. Reach out to a Federal Retirement Consultant (FRC®) who can help align your TSP allocation with your time horizon, income needs, and risk tolerance.