G Fund and Treasury Yields

[jamat7]

Does anyone know: I know the G Fund is based upon Treasuries with maturity longer than 4 years. I see today the yield is going up on a 5 year Treasury note. If this trend would continue and go up----does that mean that the G fund return would eventually go up? (Last week or so the yield on a 5 year note was around 1.06%. Today, it's around 1.44%.)

Also, I thought QE2 was supposed to hammer these rates even lower (along with CD rates, etc.)

Thanks.

 

[Boghie]

Jamat7,

The 'G Fund' is the 'Social Security Lockbox'.:nuts:

It is not an investment in Treasuries as you know them. You are purchasing the exact same 'Treasuries' that Social Security sells to the Federal Government. That is:

The G Fund assets are managed internally by the Federal Retirement Thrift Investment Board. The G Fund buys a nonmarketable U.S. Treasury security that is guaranteed by the U.S. Government. This means that the G Fund will not lose money.​

So, if you like the retirement plan offered by Social Security invest in the 'G Fund'!!!

As a result, you have no means of tracking 'G Fund' assets via market indexes.

One issue is that Social Security bonds can be borrowed by the Federal Government. Thus, they can legally borrow from the 'G Fund' - because it is Social Security bonds. They have done so three times - twice in the last 10 years. Generally to cover expenses till the Congress raises the debt ceiling...

 

[jamat7]

Thank you Boghie!