Mike Causey

How Many Funds Is Too Many?

Do you wish your 401(k) plan had a Gold Fund, an Internet Fund, or a Real Estate Fund? Senior Correspondent Mike Causey has reserved you a front-row seat at a c...

Federal News Network Staff

July 10, 2008 4:00 am

3 min read

Are you depressed because the federal Thrift Savings Plan doesn’t offer a gold fund? Do you wish you had been able to invest in a real estate fund (before housing prices tanked, of course) as part of your government 401(k) plan?

Do you envy private sector pals whose 401(k) plans may include “socially responsible” or environmentally-friendly green funds? Would you like to be able to invest some or all of your optional retirement nest egg funds in minority businesses?

Would you be willing to pay higher fees for more investment options?

If so, check out House hearings that are scheduled to be held today. The subject is whether the Federal Retirement Thrift Investment Board (it runs the TSP) should offer more investment options for federal, postal and military participants. Many members of Congress have pushed the board to offer more fund choices. Sometimes they are responding to voters, sometimes to groups who give hefty political donations that would love to have a piece of the $225.7 billion TSP pie. This is money that feds have invested, matching government contributions, and the result of earnings/losses.

Many of the people who are outside-looking-in at the TSP action, which spent $78.6 million on administrative costs last year, would like to be part of it. The TSP, after all, is the world’s largest 401(k) plan. Uncle Sam handles the regular payroll deductions of the nearly 3.8 million participants who have the most stable jobs in the nation.

Today’s hearing is entitled Investing in the Future: Minority Opportunities and the Thrift Savings Plan. Backers of fund diversification say it is time that the TSP offered investors the option of participating in minority-owned or operated firms which, they say, often outperform bigger, more traditional funds.

Currently the TSP offers investors a G-fund, special treasury securities; an F-fund, bond index; the C-fund, an S&P 500 index fund; the S-fund, made up of most of the rest of the U.S. stock market; and the international stock-index I fund. There are also the so-called “target date,” balanced and self-adjusting L funds.

Officials who run the TSP, based on rules laid down by Congress, have traditionally resisted offering new funds. Partly, they say, for fear that it will raise administrative costs (now the lowest in the mutual fund business). They will argue that the existing funds pretty well cover the investment option waterfront.

Rather then tell you what happens, why don’t you check it out for yourself. If you have the capability, the 10 a.m. (EDT) hearing will be webcast at: http://federalworkforce.oversight.house.gov/

Click on “hearings” on the main menu and select the hearing based on the date (today) and the title “Investing in the Future: Minority Opportunities and the Federal Employee Thrift Savings Plan (TSP).”

Then, instead of us telling you what we saw (through our own personal filters) and telling you what you missed, maybe you can tell us what you heard and saw, and what it means to you.

Nearly Useless Factoid

Six of the eight planets in our solar system rotate on their axes in the same direction: counterclockwise (when viewed from above their “north” poles.) Venus and Uranus spin the other way.

To reach me: mcausey@federalnewsradio.com