For the second year in a row, all TSP funds ended the year in positive territory. Federal employees heavily invested in the I Fund benefited from an impressive 32.45% return, the highest ever for that fund. Stock-based funds (C, S & I) continue to deliver the best performance for investors. The C Fund finished 2025 up 17.85%, followed by the S Fund at 11.38%.
G Fund:
0.35% December
4.44% 2025
F Fund:
-0.26% December
7.21% 2025
C Fund:
0.06% December
17.85% 2025
S Fund:
-0.53% December
11.38% 2025
I Fund
3.04% December
32.45% 2025
The TSP offers several core funds, plus Lifecycle (L) funds that blend investments based on your target retirement date. The three stock-based core funds (C, S, and I) track broad market indexes:
- C Fund invests in U.S. large- and mid-cap companies by mirroring the S&P 500.
- S Fund focuses on U.S. small- and mid-cap stocks outside the S&P 500, tracking the Dow Jones U.S. Completion Total Stock Market Index.
- I Fund targets international companies in developed markets outside the U.S. and Canada, following the MSCI ACWI IMI ex China ex Hong Kong Index.
These funds’ performance directly correlates with stock market trends, meaning market rallies translate into portfolio gains. The other core funds, F (bonds) and G (government securities), offer more modest, stable returns, while L Funds provide a diversified mix that gradually shifts toward conservative investments as retirement nears.
Equity exposure can pay off. Years like 2025 show how stock-based allocations can generate significant growth, especially over the long term.
Diversification remains essential. While stock funds outperformed this year, combining equities with fixed-income and government securities helps balance growth and risk.
Time in the market matters. Long-term investors who maintain a consistent allocation tend to benefit more than those attempting to time market fluctuations.
Review your TSP allocation. Strong performance in some funds may prompt a review of whether your current mix aligns with your goals, risk tolerance, and retirement horizon.
Your TSP allocation can dramatically influence retirement outcomes. Federal employees should consider how stock exposure, diversification, and long-term strategy fit into their broader retirement plan. With careful planning, attention to market trends, and the help of a Federal Retirement Consultant (FRC®), you can help ensure your TSP works as hard as you do.
