TSP Fund Pairing Insights: Navigating Risk and Returns
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Interpretation:
When 100% of the investment is in the G Fund, the expected return is 0.3465%, with a risk of 0.0003785.
Meanwhile, when 100% of the investment is in the C Fund, the expected return increases to 1.5002%, with a risk of 0.04470.
This example demonstrates how risk and return adjust based on fund allocation.
Key Insights for October 2025
Highest Return Mix:
100% C Fund offered the highest return.
Lowest Risk Mix:
The G Fund had the lowest risk while providing more returns than F Fund.
The TSP funds showed only minor shifts this month, marking a gentle rebound from the slight decline seen in September. Performance improved modestly while risk levels dipped just enough to signal stabilization rather than strong growth. The C, S, and I Funds all nudged upward, while the G and F Funds held nearly steady—consistent with their defensive profiles. Overall, the chart shows a small but encouraging correction back toward expected results, suggesting the funds may be regaining their footing after last month’s softness.
This actual visualization illustrates the trade-off between risk and return for different TSP fund mixes based on three years of monthly data.
How to Read the Chart
X-Axis:
Represents the “risk” of the particular mix, measured by statistical covariance over the last three years of monthly data. Left to right: From less variable (lower risk) to more variable (higher risk).
Y-Axis:
Represents the statistical “expected monthly return” of the particular mix, measured by the mean of the last three years of monthly data. Bottom to top: From lower returns to higher returns.
Legend:
Each line represents a specific fund mix (e.g., G and F Fund). The line shows how the risk and return evolve as the mix transitions from 100% of one fund to 100% of the other in 5% increments.