TSP C Fund: Quick Guide

The C Fund offers broad exposure to the U.S. stock market by tracking the S&P 500 Index, providing growth potential through investments in large and medium-sized U.S. companies. With higher long-term return potential than the G and F Funds, it comes with greater short-term volatility, making it a core growth component for TSP investors with adequate time horizons.

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Table of Contents

• Introduction

• Key Features

• Historical Performance

• Risk Profile

• Ideal Investor Profile

• Advantages and Limitations

• Strategic Considerations

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Introduction

The C Fund (Common Stock Index Investment Fund) gives federal employees access to the broad U.S. stock market by tracking the S&P 500 Index. This fund invests in stocks of large and medium-sized companies that represent approximately 80% of the market value of the U.S. stock market, providing significant growth potential through capital appreciation and dividend income.

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TSP C Fund Key Features

Feature	Description
Investment Type	Large and mid-cap U.S. stocks tracking the S&P 500 Index
Risk Level	Moderate to high
Volatility	Moderate to high
Inflation Protection	Strong (historically outpaces inflation over long periods)
Income Generation	Quarterly dividends plus capital appreciation
Principal Protection	None (Subject to market fluctuations)
Minimum Investment	None (Can allocate any percentage of TSP balance)
Management Expense Ratio	0.049% (2023) - Significantly lower than comparable index funds

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Historical Performance

Time Period	Average Annual Return
1-Year (2023)	26.27%
3-Year (2021-2023)	10.13%
5-Year (2019-2023)	15.70%
10-Year (2014-2023)	12.90%
Since Inception (1988)	Approximately 10.7%

Source: TSP Fund Performance

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Risk Profile

The C Fund carries several types of risk:

• Market risk: Subject to stock market fluctuations and potential significant declines

• Economic risk: Performance tied to overall economic conditions

• Concentration risk: Limited to large and mid-cap U.S. companies

• Volatility risk: Can experience substantial short-term price swings

• Sector risk: Performance can be affected by specific sector performance

While the C Fund has historically provided strong long-term returns, it can experience significant negative returns in the short term during market downturns.

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Ideal Investor Profile

The C Fund may be appropriate for:

• Long-term investors: Those with 7+ years until they need the money

• Growth-oriented investors: Those seeking capital appreciation as a primary goal

• Early to mid-career employees: Federal workers with time to weather market cycles

• Risk-tolerant investors: Those comfortable with significant short-term fluctuations

• Retirement planners: Those building wealth for retirement years away

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Advantages and Limitations

Advantages

• Growth potential: Historically provides higher returns than fixed-income options

• Dividend income: Generates quarterly dividend payments

• Inflation protection: Typically outpaces inflation over long time periods

• Tax efficiency: Lower turnover than actively managed funds (though less relevant within TSP)

• Broad diversification: Exposure to hundreds of major U.S. companies across sectors

Limitations

• Volatility: Can experience significant short-term declines

• Geographic limitation: Only includes U.S. companies

• Size limitation: Excludes small-cap companies

• Sector imbalances: Can become concentrated in certain sectors based on market capitalization

• No downside protection: No mechanisms to limit losses during market declines

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Strategic Considerations

Consider these strategic approaches for incorporating the C Fund in your TSP allocation:

1. Core holding strategy: Use as a foundation of long-term portfolio growth

2. Dollar-cost averaging: Regular contributions regardless of market conditions

3. Tax-efficient placement: Ideal for tax-advantaged accounts like TSP

4. Rebalancing discipline: Periodically rebalance to maintain desired asset allocation

5. Life-cycle adjustment: Gradually reduce allocation as retirement approaches

For more information about the S&P 500 Index composition and methodology, visit S&P Dow Jones Indices.

For retirement planning tools and resources, visit the TSP website.

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This guide is intended for educational purposes only and does not constitute financial, legal, or tax advice. Federal employees should consult with qualified professionals regarding their specific circumstances.