Best Monthly C Fund Returns Since November 2023
Encouraging inflation data and an enthusiasm for stocks in the tech sector helped fuel stock market returns in May which propelled last month’s TSP performance. The S&P 500 was up more than 6% in May while the C Fund, based on the S&P 500 index, was up 6.29% for the month. This was the best month for the C Fund since November 2023.
In November 2023, the C Fund was up 9.12% (the S Fund was up 11.19% that month). 2025 has not been favorable for the C Fund as it declined in February, March, and April. But, after the May returns, the C Fund is up 6.29% for the month, 13.47% for the past 12 months and now up 1.05% for the year to date.
Bonds, TSP Funds, and the National Debt
The 10-year Treasury yield went up to 4.418% in May as more information about the president’s multitrillion-dollar fiscal package became available. A rating service removed the U.S. debt triple-A rating, citing the increasing national debt projections.
Under President Biden, our federal debt increased about $8.4 trillion during his four years in office, from January 2021 to January 2025—the largest dollar increase of any previous president over a single term.
There was hope the debt would start to decline under President Trump. So far, that does not appear to be likely due to Congress now considering extending expiring tax cuts and other measures that, if not offset by spending reductions or new revenue, will add more to the national debt.
Why Did the G Fund Go Up in May While the F Fund Dropped?
The G Fund and the F Fund are both bond funds in the Thrift Savings Plan. The interest rate for these funds is not the same as the bonds in each fund are different which enables TSP investors to have a more diverse investment portfolio.
The G Fund invests in special U.S. Treasury securities. It provides a fixed interest rate set monthly by the U.S. Treasury. This rate is based on the average yield of Treasury securities with four or more years to maturity, and the U.S. government guarantees the principal. The G Fund never experiences a loss. Returns are always positive and reflect the prevailing Treasury rates. This makes the G Fund stable and immune to fluctuations in the broader bond market.
As a result of expectations for 2026 federal spending and the impact on bonds, as mentioned above, the F Fund decreased in May. The F Fund tracks the Bloomberg US Aggregate Bond Index.
When interest rates rise or there is volatility in the bond market—often driven by economic uncertainty, inflation expectations, or Federal Reserve policy—bond prices tend to fall, resulting in lower or even negative returns for bond funds like the F Fund. This means the F Fund is sensitive to changes in interest rates and market volatility.
TSP Returns for All Funds in May
| Fund | Month-to-Date | 12-Month | Year-to-Date |
|---|---|---|---|
| G Fund | 0.36% | 4.43% | 1.85% |
| F Fund | -0.71% | 5.45% | 2.44% |
| C Fund | 6.29% | 13.47% | 1.05% |
| S Fund | 7.21% | 9.58% | -3.13% |
| I Fund | 4.97% | 10.89% | 14.42% |
| L Income | 1.79% | 6.82% | 2.94% |
| L 2025 | 1.87% | 7.14% | 2.95% |
| L 2030 | 3.65% | 9.55% | 4.05% |
| L 2035 | 3.97% | 10% | 4.23% |
| L 2040 | 4.29% | 10.43% | 4.40% |
| L 2045 | 4.57% | 10.8% | 4.53% |
| L 2050 | 4.86% | 11.15% | 4.66% |
| L 2055 | 5.90% | 12.22% | 5.03% |
| L 2060 | 5.90% | 12.22% | 5.03% |
| L 2065 | 5.90% | 12.22% | 5.03% |
| L 2070 | 5.90% | 9.43% | 5.05% |
Interfund Transfers, Stock Market Returns, and TSP Performance
Recently, a FedSmith article noted:
Interfund transfers were roughly twice as high in March over the usual number of transfers, probably as a result of the falling market in stocks. 3.77% of TSP investors transferred money during the month according to data released by the FRTIB in the monthly meeting of April 22, 2025. Obviously, this is a small percentage of all TSP investors although about $21 billion leaving the two largest stock funds in one month is still a great deal of money.
In April, the market was still volatile but the stock funds went higher. Was this reflected in the interfund transfers for the month?
The transfers were still higher than a typical month with 3.4% of TSP participants transferring money.
In March, the C Fund dropped 5.64%. The S Fund fell 7.92%. Probably as a result, interfund transfers from the C Fund were over $14 billion. Another $7 billion was transferred from the S Fund, and $16.6 billion was transferred into the G Fund.
In April, about $6.5 billion was transferred into the G Fund while about $4 billion was transferred out of the C and S Funds, and about $2.8 billion transferred out of the Lifecycle Funds.
If the stock market continues to go up, or at least stops dropping, it is likely the interfund transfers will reflect the change in the stock market trend.
© 2025 Ralph R. Smith. All rights reserved. This article
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