Federal Small Cap Fund Performance
The federal Small Cap Fund, or S Fund, is part of a larger group of mutual funds offered to federal employees through their Thrift Savings Plans. These plans are similar to a 401(k) offered in the private sector. While the S fund has seen a dramatic decline in investment values, it is one of the highest-performing federal funds and will make a good addition to a diversified investment portfolio.
Other People Are Reading
-
Fund Composition
-
The Small Cap Fund is meant to represent small cap stocks, however, it includes all of the U.S. stocks that aren't tracked as part of the S&P 500. This means that the fund is actually composed of both mid-cap and small cap stocks. According to TSPTalk, "the objective of the S fund is to match the performance of the Dow Jones U.S. Completion Total Stock Market Index".
The fund invests 24.2 percent of its holdings in the financial sector; the information technology sector is the second largest with 15.0 percent of holdings.
Performance
-
According to the Thrift Savings Plan, the Small Cap Fund's one-year returns averaged 34.85 percent in 2009, compared to 37.43 percent for the Dow Jones U.S. Completion Total Stock Market Index in the same year. Since the fund's inception on May 1, 2001, it has returned 4.86 percent, compared to 4.99 percent for the Index.
The Small Cap Fund showed stronger returns for 2009-2010 than any of the other federal federal funds.
-
Who Can Invest?
-
Only federal employees are eligible to invest in the Small Cap Fund through their Thrift Savings Plans. However, you can visit the Thrift Savings Plan website (see Resources) to learn more about the fund and its composition. Many mutual fund companies offer funds that also track the Dow Jones U.S. Completion Total Stock Market Index, both through defined contribution and 401(k) plans and individual funds.
Future Outlook
-
In February 2010, the recovering stock market helped drive the Thrift Savings Plan as a whole to a balance of $246.3 billion, its highest level ever. This balance was almost 29 percent higher than it was one year earlier, according to the Federal Times. This increase was driven largely by gains in the Small Cap Fund, which was up 4.89 percent during this time. Also, as of August 2009, new federal employees are automatically enrolled in the Thrift Savings Plan and can disperse their money among the funds immediately. This increase in enrollment led to nearly 4.3 million total participants in February 2010, a new high. Loans disbursed from Thrift Savings accounts also decreased in February 2010 for the first time since May 2008, further boosting the Plan's value and future outlook.
Dividend Income and Capital Gains
-
The Thrift Savings Plan, along with similar defined contribution and 401(k)-style plans, manage their dividends and capital gains differently than traditional mutual funds because the money invested is tax-deferred. The company that manages the funds that the Small Cap Fund invests in, BlackRock Institutional Trust Company, N.A., credits dividend income each business day. Any dividend income gained is then reflected in the Fund's share price. Because of this, you will not see dividends or capital gains on your statement.
-
References
Resources
- Photo Credit money money money image by Arman Zhenikeyev from Fotolia.com
