C Fund vs. S Fund

[TommyIV]

C Fund vs. S Fund: Which TSP Investment is Right for You

In this blog post, we delve into the distinctions between the Thrift Savings Plan's C Fund and S Fund, examining their objectives, investment compositions, risk levels, and historical performances. Whether you're seeking steady growth or high potential returns, understanding these differences will help you make informed investment decisions to optimize your TSP portfolio.

 

[FireWeatherMet]

It always amuses me on the tracker whenever the "S-Herd" with its near 100 members, stampedes past me, or vice versa, on the Annual Tracker.
All the funds have some "Herds" where members just "park it, and forget it" for most of the year, or multiple years.
The C Fund "Herd" is only about half the size of the "S-Herd", just a little over 50 members as far as I can see, in the "C" since Jan 1st.
So the assumption by the larger group, is that the S-Fund is a better bet than the C, in the longer run....BUT is this true? Why do so many members feel the S is better than the C long term?

At a recent retirement seminar, the main speaker showed the avg returns of the past 1, 3, 5, 10 years and in ALL of them, the C beats the pants off the S. So what gives?
A look over the past 22 years, since inception of the S-Fund, gives us a hint I've circled in green, years the S fund beat the C.
In the first 4 years of the S-Fund inception it strongly outperformed the S&P, by as much as double the return. In the first 12 years, the S Fund outperformed the C 2/3 of the time.
But this trend seems to have ended 10 years ago...where from 2014-2023, the C outperformed the S in 8 out of 10 years.
This doesn't include this year where the C is crushing the S fund 13.10% vs 2.42%!

What's the reason for this decadal switch?
Is it where Small Caps lead early in a Bull Market, then Large Cap takes over late in a Bull run?
Or have major global technological advances been confined more to larger companies, like NVIDIA, and the FANG stocks?
In any event, I've usually split my "In Stock Allocation" time between the C & S...including now, where I'm now itching to get rid of my S allocation, but don't want to waste an IFT for it this early in the month. But when I jump into G safety sometime soon, my entrance back into stocks will primarily be in the C-fund.
The data doesn't lie...past returns from 10-20+ years ago have nothing to do with current expectations.

 

[JTH]

But when I jump into G safety sometime soon, my entrance back into stocks will primarily be in the C-fund.
The data doesn't lie...past returns from 10-20+ years ago have nothing to do with current expectations.

Sorry for the rant, but you gave me a good opportunity to address this issue without purposefully appearing to bash the S-Fund. This month, 3 stocks are entering the S&P 500 and kicking 3 others to the curb. This index (tracked by the C-Fund) just does a better job of pruning out the dead branches (less it more).

For myself, I stopped tracking small/mid cap stocks, they just move around too much, it was both a lot of extra work and it can be difficult to acquire accurate data. But from what I did learn, it really confirmed my awareness of just how powerful the S&P 500 really is.

Top-30 S&P 500 stocks, are weighted at 50.51% of the Index, and have given 46% YTD
Top-279 IWM stocks, are weighted 50.56% of the Index, and have given 10.65% YTD

In total (from what I’m able to track)
An estimated 60% of the S&P 500’s 503 holdings are positive YTD.
An estimated 37% of IWMs 1900+ holdings are positive YTD.

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From what I've noticed, 1 of 5 things will happen to a small/mid cap stock.

1) It will fall into a lower index and eventually die.

2) It will do nothing for a very very very long time.

3) Or (if you’re lucky) It will do well and rise to the top of the index.
….3a) And then a large cap company acquires it and now it’s merged into an S&P 500 company.
….3b) Or it does well enough to enter the S&P 500

 

[FireWeatherMet]

Great point JT, about stocks not being kicked out and replaced as readily in the Small Cap Fund.
Maybe at inception time 20+ years ago that index was fresh, thus S outperformed C the first few years handily.
Don't understand why whoever created/manages that index can't do the same "window dressing" annually thats done on the S&P.

Sorry for the rant, but you gave me a good opportunity to address this issue without purposefully appearing to bash the S-Fund. This month, 3 stocks are entering the S&P 500 and kicking 3 others to the curb. This index (tracked by the C-Fund) just does a better job of pruning out the dead branches (less it more).

For myself, I stopped tracking small/mid cap stocks, they just move around too much, it was both a lot of extra work and it can be difficult to acquire accurate data. But from what I did learn, it really confirmed my awareness of just how powerful the S&P 500 really is.

Top-30 S&P 500 stocks, are weighted at 50.51% of the Index, and have given 46% YTD
Top-279 IWM stocks, are weighted 50.56% of the Index, and have given 10.65% YTD

In total (from what I’m able to track)
An estimated 60% of the S&P 500’s 503 holdings are positive YTD.
An estimated 37% of IWMs 1900+ holdings are positive YTD.

View attachment 61072

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From what I've noticed, 1 of 5 things will happen to a small/mid cap stock.

1) It will fall into a lower index and eventually die.

2) It will do nothing for a very very very long time.

3) Or (if you’re lucky) It will do well and rise to the top of the index.
….3a) And then a large cap company acquires it and now it’s merged into an S&P 500 company.
….3b) Or it does well enough to enter the S&P 500