Dollar getting crushed affect on the I today.

[sugarandspice]

With the Euro slamming the dollar and the EFA basically flatlining so far, lets see how the % gain in the EFA will equate to the actual share price in the tsp.

I really feel like the dollar should be the focus playing the I fund and not so much the markets.

 

[tom1tom1]

With the Euro slamming the dollar and the EFA basically flatlining so far, lets see how the % gain in the EFA will equate to the actual share price in the tsp.

I really feel like the dollar should be the focus playing the I fund and not so much the markets.

Sent from my iPhone using TSP Talk Forums

 

[evilanne]

For Dec 8th, the increase of 0.38% in TSP vs 0.53% EFA closing on Friday indicates 0.15% difference due to exchange rate.

 

[userque]

https://www.tsp.gov/InvestmentFunds/FundsOverview/sharePriceCalculation.html

[emphasis added]

"Fair Value Pricing

On some days, the percentage change in the I Fund share price reported by the TSP can be significantly different from the percentage change reported for the MSCI EAFE (Europe, Australasia, Far East) Index, which the I Fund tracks. These differences usually occur when the investment manager finds it necessary to reprice its EAFE Equity Index Fund, in which the TSP invests, to reflect changes occurring after the close of the foreign markets.

This process, known as "fair valuation" or "fair value pricing", occurs when there are U.S. market or currency movements between the time the foreign markets close and 4:00 p.m., Eastern time, when the EAFE Equity Index Fund share prices are determined.

For example, the Far East markets close at 3:00 a.m., Eastern time. If there is a major event afterwards - whether a natural disaster or even a major U.S. market swing that affects the pricing of the stocks in the EAFE Equity Index Fund - without fair value pricing, that event's impact on share pricing would be ignored. That is, the price information from the foreign markets can become "stale", or out of date, by the close of the U.S. markets at 4:00 p.m., Eastern time - a full 13 hours later. On such a day, absent fair value pricing, market timers could buy the I Fund and sell their holdings on the following day in order to benefit from the "stale" pricing. They would accomplish this transaction at the expense of other investors in the fund.

Fair value pricing ensures that traders do not benefit from trading on stale prices. It prevents traders from using events that may have occurred between the close of the foreign market and the close of the U.S. market, which may have affected EAFE Index Fund prices, to achieve an unfair trading and profit advantage at the expense of long-term shareholders."