Ringing in the new year for your retirement savings? The Thrift Savings Plan (TSP) has some good news: the International Stock Index Investment Fund, also known as the I Fund, is getting a makeover! Starting in 2024, it will track a brand new benchmark index, as part of the major changes to the I Fund benchmark index in 2024, expanding your investment horizons and potentially boosting your long-term returns.
The I Fund is one of five core investment options within the TSP, providing exposure to international stocks. Its current benchmark, the MSCI Europe, Australasia and Far East (EAFE) Index, focuses on developed markets. The new benchmark, the MSCI All Country World ex USA ex China ex Hong Kong Investable Market Index (MSCI ACWI IMI ex USA, ex China ex Hong Kong), opens the door to a wider world, including:
The current I Fund does not allow any investments in Emerging Markets. The new index adds this ability. It can now add one of the biggest trading partners of the United States, Mexico.
| Emerging Market | ||||
|---|---|---|---|---|
| Brazil | Chile | Columbia | Czech Republic | Egypt |
| Greece | Hungary | India | Indonesia | S. Korea |
| Kuwait | Malaysia | Mexico | Peru | Philippines |
| Poland | Qatar | Saudi Arabia | South Africa | Taiwan |
| Thailand | Turkey | UAE | ||
Also expands the existing exposure to developed markets. It does remove exposure to Hong Kong but added Canada, the third biggest trading partner of the US.
| Developed Market | ||||
|---|---|---|---|---|
| Australia | Austria | Belgium | Canada | Denmark |
| Finland | France | Germany | Ireland | Isreal |
| Italy | Japan | Netherlands | New Zealand | Norway |
| Portugal | Singapore | Spain | Sweden | Switzerland |
| U.K. | ||||
From tech giants to healthcare innovators, the index encompasses a broader range of industries and invests in 5,627 companies accross the 21 developed markets and 12 emerging markets above.
The Federal Retirement Thrift Investment Board had plans to update the I Fund since 2009. The initial plans were approved to use an index that excluded the United States. However, the Trump administration raised concerns about exposure to China, and implementation was halted. In 2023, the board approved to the use of different index that excluded China and Hong Kong. Several factors played a role:
Many mutual funds already offer similar options, and the TSP is adapting to keep pace with investor needs and the evolving global economy.
So, as you welcome the New Year, remember that your TSP investments are on the move too. Embrace the broader opportunities presented by the new benchmark index and look forward to potentially brighter prospects for your retirement nest egg!
If you have additional federal benefit questions, reach out to our team of CERTIFIED FINANCIAL PLANNER™ (CFP®), Chartered Federal Employee Benefits Consultants (ChFEBC℠), and Accredited Investment Fiduciaries (AIF®). At PlanWell, we focus on retirement planning for federal employees. Learn more about our process designed for the career federal employee.
Preparing for a federal retirement? Check out our scheduled federal retirement workshops. Sign up for our no-cost federal retirement webinars. Make sure to plan ahead and reserve your seat for our FERS webinar, held every three weeks. Interested in having PlanWell host a federal retirement seminar for your agency? Reach out, and we can collaborate with HR to arrange an on-site FERS seminar.
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