Join Early Retirement Today
Thread Tools Search this Thread Display Modes
TSP G-Fund question
Old 03-13-2012, 09:22 AM   #1
Thinks s/he gets paid by the post
Tadpole's Avatar
Join Date: Jul 2004
Posts: 1,271
TSP G-Fund question

Since so many federal employees and retirees are members of the ER forum, I decided to ask a question I have about the G-Fund here.

The G-Fund interest rate is computed as a weighed average of US Treas securities with 4 or more years to maturity with an average duration of about 10 years.

This is great in a falling interest rate environment but will there be a "weighted" ten year lag in the G-Fund rates in a growing interest rate environment since an overwhelming number of very low rate securities have been sold which are unlikely to find buyers and get good turnovers/redemptions in a rising rate environment?

I guess I don't understand how, going forward, the G-Fund can "earn a higher rate of return than do short-term marketable Treasury securities" and I wonder if this precise situation may explain the hedge-word "usually" that accompanies the phrase. The last graph in the fund document:

looks like the G-Fund indeed has been having a flat response to rising rates in recent years compared to the early 90s. Is this because of the number of years rates have been kept low and the number of low rate securities with long maturities outstanding?
Tadpole is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Emergency Fund amounts kfindley79 Young Dreamers 92 05-15-2012 02:53 PM
Question for my old funky laptop easysurfer Other topics 22 03-13-2012 09:55 AM
Cost of Goods Sold Tax Question? alex11 FIRE and Money 3 03-12-2012 07:07 PM
new slant on pay off mortgage question nphx FIRE and Money 8 03-06-2012 03:45 PM
Electronics Repair Question LauAnn Other topics 12 03-04-2012 11:28 AM

» Quick Links

All times are GMT -6. The time now is 01:04 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.