What has been the impact of frequent interfund transfer activity on the TSP Funds?
Frequent trading activity has (1) increased fund transaction costs and (2) increased the likelihood that a fund’s performance will deviate from its benchmark. (1) Transaction costs, which are in addition to the TSP administrative expense for each fund, can be double or triple the cost of administering the fund. Transaction costs are not fees paid to Barclays Global Investors (BGI, the investment manager for the F, C, S, and I Funds). They are costs comprising commissions paid to brokers, transfer taxes, and market impact (the difference between when the stock is bought or sold versus the stock price used to value the fund). Before BGI places an order to buy or sell shares in the market, it trades shares internally among other public and corporate tax-exempt employee benefit plans that are invested in the same index funds as the TSP. There is no cost to the TSP for this service. However, the larger the trade, the lower the percent that can be internally moved between plans. Thus, an inc
Frequent trading activity has (1) increased fund transaction costs and (2) increased the likelihood that a fund’s performance will deviate from its benchmark. (1) Transaction costs, which are in addition to the TSP administrative expense for each fund, can be double or triple the cost of administering the fund. Transaction costs are not fees paid to Barclays Global Investors (BGI, the investment manager for the F, C, S, and I Funds). They are costs comprising commissions paid to brokers, transfer taxes, and market impact (the difference between where the stock is bought or sold versus the stock price used to value the fund). Before BGI places an order to buy or sell shares in the market, it trades shares internally among other public and corporate tax-exempt employee benefit plans that are invested in the same index funds as the TSP. There is no cost to the TSP for this service. However, the larger the trade, the lower the percent that can be internally moved between plans. Thus, an in
