TSP S Fund

The Thrift Savings Plan (TSP) S Fund is a US government retirement savings plan designed for federal employees and members of the uniformed services. It is one of the TSP's five individual investment funds and is intended to provide a medium to long-term investment opportunity for participants seeking exposure to US small-cap stocks.

The S Fund is a stock index fund that tracks the performance of the Dow Jones US Completion Total Stock Market Index. This index includes the small and medium-sized companies that are not included in the S&P 500 Index, which is the benchmark index for the TSP's C Fund.

Investors in the S Fund can expect to achieve returns similar to those of the US small-cap stock market. Small-cap stocks have historically outperformed large-cap stocks over the long term, but they are also more volatile and riskier than large-cap stocks. As such, investing in the S Fund may be more appropriate for individuals with a higher risk tolerance.

The S Fund is a passively managed fund, which means that its portfolio is designed to replicate the performance of the Dow Jones US Completion Total Stock Market Index rather than being actively managed by a fund manager. This passive approach is reflected in the S Fund's low expense ratio, which is one of the lowest among all US small-cap index funds.

As of 2021, the S Fund's portfolio was invested in over 3,500 small and medium-sized US companies, with its top holdings including the likes of Uber, Zoom, and Square. The S Fund's portfolio is rebalanced quarterly to ensure that its composition remains aligned with the Dow Jones US Completion Total Stock Market Index.

Investors in the S Fund can make contributions through payroll deductions, with the maximum contribution limit set by the Internal Revenue Service (IRS). As of 2021, the maximum contribution limit for the TSP was $19,500 per year, with an additional $6,500 catch-up contribution allowed for participants aged 50 and over.

The TSP S Fund is a useful tool for investors seeking to diversify their retirement portfolios by investing in US small-cap stocks. However, investors should be aware of the risks associated with small-cap stocks and be prepared for increased volatility. As with all investments, it is important to do your research and consult with a financial advisor before making any investment decisions.