The TSP’s I Fund is Changing [video]

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What kind of International Fund do you have?

You may think that most International Funds are the same - just investing in non-U.S. companies, but it actually can be a little more complicated than that. So let's go through why, using as an example, the most recent change to the TSP's I Fund.

International funds can have different compositions.

A fund can be categorized as International, but just have exposure to Developed Nations such as the UK, Japan, Australia. Or it could be just having exposure to Emerging Nations like India, Brazil, Mexico. Or it could have exposure to both. Or it could also exclude other countries besides just the US.

The TSP's International fund, the I Fund, is undergoing a change that will be done by the end of this year, end of 2024. Originally, the benchmark had exposure to just Developed Nations - it was the MSCI EAFE. The benchmark is changing to have exposure to both Developed and Emerging Markets, so it's going to be more broad and more diversified. The new index will be the MSCI All Country World (Investable) Market Index ex US ex China ex Hong Kong.

In the past, you may have known that the I Fund only had exposure to Developed Nations, so maybe you had an additional slice of Emerging Markets Funds in the rest of your portfolio to complement that. If that's the case, you may start to want to unwind that Emerging Market market position now that the I Fund is changing and will be more comprehensive.

Don’t depend on a Fund’s name.

Even if you don't have the TSP, this is a good reminder to just look a little deeper at your International Fund. Let me give you an example. Even at Fidelity, there is a Fidelity International Index which only has exposure to Developed Nations. Then there's a Fidelity Global ex US that's Developed and Emerging Markets. You can see how people can be confused by just looking at the name.

So you do need to look a little deeper. Neither is better or worse - it's just what do you want, what you're looking for. I personally do like the more comprehensive fund that has both Developed and Emerging Markets.

What to do when your International Fund doesn’t have a ticker.

If a fund has a ticker symbol, then it's fairly easy to go ahead and do the research and just see what the composition of that fund is. But it is harder when you have something like the I Fund that doesn't have a ticker symbol or these Collective Investment Trusts (CITs) that I do see a lot in 401ks. They're great - they're broad, they're low cost, they're diversified - but we don't have a ticker symbol. So we need to look at the benchmark and be very clear. What is the benchmark it's tracking? Then we can look at the composition of that benchmark to know, okay, Developed, Emerging, whatever it is, so that we can do our portfolio allocation.

So now, armed with all this information, go ahead and find out what International Fund you have and reach out with any questions. My name is Linda Rogers, Owner of Planning Within Reach.

Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.

Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.