Key Takeaways:
- 2025 top performer: The I Fund led all TSP funds with a 32.45% return—the best single-year performance since 2013—following its expanded benchmark index
- TSP expense ratios are among the lowest anywhere: Total expense ratios range from 0.034% to 0.047%, meaning you pay just 34-47 cents per $1,000 invested annually
- The C Fund remains the long-term wealth builder: Tracking the S&P 500, it has averaged approximately 10-11% annual returns over the past 20 years
- G Fund offers guaranteed stability: The only TSP fund that has never had a negative year, with 2025 returning 4.44%
- I Fund underwent a major benchmark change in 2024: It now tracks 5,500+ companies in 44 countries (excluding China and Hong Kong), up from 800 companies in 21 countries
- Diversification reduces volatility: A balanced allocation across funds historically produces more consistent returns with less dramatic swings
Table of Contents:
- TSP Fund Performance Overview
- 2025 TSP Fund Performance
- Historical Annual Returns (2020-2025)
- Individual Fund Analysis
- TSP Expense Ratios Explained
- Risk vs. Return Analysis
- I Fund Benchmark Change: What It Means
- TSP Allocation Strategies
- L Fund Performance
- Frequently Asked Questions
TSP Fund Performance Overview
The Thrift Savings Plan (TSP) offers military service members and federal employees five core investment funds, each with distinct risk profiles and return potential. Understanding how these funds perform—both individually and relative to each other—is essential for building a retirement strategy that aligns with your goals.
TSP funds are index funds, meaning they passively track established market benchmarks rather than trying to beat the market through active management. This approach keeps costs exceptionally low while providing broad market exposure.
Here’s a quick comparison of all five TSP individual funds:
| Fund | Investment Type | Benchmark Index | Risk Level | 2025 Return |
|---|---|---|---|---|
| G Fund | Government Securities | Special Treasury securities | Lowest | 4.44% |
| F Fund | Bonds | Bloomberg U.S. Aggregate Bond Index | Low-Moderate | 7.21% |
| C Fund | Large-Cap U.S. Stocks | S&P 500 Index | Moderate-High | 17.85% |
| S Fund | Small/Mid-Cap U.S. Stocks | Dow Jones U.S. Completion TSM Index | High | 11.38% |
| I Fund | International Stocks | MSCI ACWI IMI ex USA ex China ex Hong Kong | High | 32.45% |
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2025 TSP Fund Performance
2025 was a standout year for TSP investors, with the I Fund delivering its best performance since the fund’s inception. The year demonstrated why international diversification matters—while U.S. stocks performed well, international markets significantly outpaced them.
TSP Fund Performance: 2020-2025
Source: TSP.gov. Past performance does not guarantee future results.
2025 Full-Year Returns
| Fund | 2025 Return | Notes |
|---|---|---|
| I Fund | 32.45% | Best performer; highest return since 2013 |
| C Fund | 17.85% | Strong large-cap U.S. performance |
| S Fund | 11.38% | Small/mid-caps lagged large-caps |
| F Fund | 7.21% | Solid bond performance |
| G Fund | 4.44% | Steady, guaranteed return |
The I Fund’s exceptional 2025 performance was driven by several factors, including the expanded benchmark index that took effect in late 2024, a weaker U.S. dollar that amplified international returns, and strong performance in emerging markets (excluding China). This marked the first time any TSP fund exceeded 32% returns since 2013.
Historical Annual Returns (2020-2025)
Looking at performance over multiple years reveals important patterns about risk and return. While stock funds offer higher potential returns, they also experience significant swings—including substantial losses during bear markets like 2022.
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
|---|---|---|---|---|---|
| 2025 | 4.44% | 7.21% | 17.85% | 11.38% | 32.45% |
| 2024 | 4.52% | 1.31% | 24.96% | 16.93% | 4.27% |
| 2023 | 4.23% | 5.60% | 26.26% | 25.71% | 18.00% |
| 2022 | 2.98% | -12.83% | -18.13% | -26.26% | -13.94% |
| 2021 | 1.38% | -1.53% | 28.68% | 12.55% | 11.16% |
| 2020 | 0.97% | 7.51% | 18.31% | 31.84% | 7.70% |
Key Observations
The G Fund has never lost money. In 2022, when every other TSP fund posted losses, the G Fund returned 2.98%. This makes it the anchor for conservative investors or those nearing retirement.
Stock funds can swing dramatically. The S Fund went from +31.84% in 2020 to -26.26% in 2022—a difference of over 58 percentage points in just two years. Long time horizons help smooth these swings.
The I Fund’s performance varies widely. It posted just 4.27% in 2024 but surged to 32.45% in 2025, demonstrating why international diversification requires patience.
Individual Fund Analysis
G Fund: Government Securities Investment Fund
The G Fund invests in special non-marketable U.S. Treasury securities issued specifically for the TSP. It’s unique because it offers long-term bond-like returns with no risk of principal loss.
Key characteristics:
- Only TSP fund with a guaranteed principal
- Never had a negative year in its history
- Interest rate is set monthly based on Treasury yields
- Best for: Conservative investors, those near retirement, or as a safe harbor during market volatility
Recent performance: The G Fund benefited from rising interest rates, with 2024 and 2025 both delivering returns above 4%—significantly better than the near-zero returns seen in 2020-2021 when rates were lower.
F Fund: Fixed Income Index Investment Fund
The F Fund tracks the Bloomberg U.S. Aggregate Bond Index, providing exposure to investment-grade U.S. bonds including government, corporate, and mortgage-backed securities.
Key characteristics:
- Moderate risk with potential for capital loss
- Typically performs well when interest rates fall
- Provides portfolio diversification from stocks
- Best for: Moderate investors seeking income and stability
Recent performance: The F Fund struggled in 2022 (-12.83%) as the Federal Reserve aggressively raised interest rates. It has since recovered, posting positive returns in 2023-2025 as rate hikes slowed.
C Fund: Common Stock Index Investment Fund
The C Fund tracks the S&P 500 Index, representing approximately 500 of the largest U.S. companies. This is the most popular TSP stock fund, holding about 35% of all TSP participant allocations.
Key characteristics:
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- Broad exposure to large-cap U.S. stocks
- Historically averages 10-11% annual returns over long periods
- Significant short-term volatility
- Best for: Long-term investors with 10+ years until retirement
Recent performance: The C Fund has been a consistent performer, posting 26.26% in 2023, 24.96% in 2024, and 17.85% in 2025—three consecutive strong years following the 2022 correction.
S Fund: Small Capitalization Stock Index Investment Fund
The S Fund tracks the Dow Jones U.S. Completion Total Stock Market Index, representing small and mid-sized U.S. companies not included in the S&P 500. Combined with the C Fund, you get exposure to the entire U.S. stock market.
Key characteristics:
- Higher volatility than C Fund
- Higher growth potential in bull markets
- Typically falls harder in bear markets
- Best for: Aggressive long-term investors seeking maximum growth
Recent performance: The S Fund has lagged the C Fund in 2024-2025, as large-cap tech stocks have driven most market gains. However, small caps historically outperform during economic recoveries.
I Fund: International Stock Index Investment Fund
The I Fund tracks the MSCI ACWI IMI ex USA ex China ex Hong Kong Index (as of late 2024), providing exposure to over 5,500 companies across 44 developed and emerging markets outside the United States.
Key characteristics:
- Diversifies beyond U.S. markets
- Currency fluctuations affect returns (unhedged)
- Now includes emerging markets (except China/Hong Kong)
- Best for: Investors seeking global diversification
Recent performance: The I Fund’s 2025 surge to 32.45% demonstrated the value of international exposure. This followed several years of underperformance relative to U.S. stocks.
TSP Expense Ratios Explained
One of the TSP’s biggest advantages is its ultra-low costs. These expense ratios represent how much of your investment goes toward administrative and management fees annually.
2025 TSP Expense Ratios
| Fund | Net Admin Expense | Investment Expense | Total Expense Ratio | Cost per $1,000 |
|---|---|---|---|---|
| G Fund | 0.034% | 0.000% | 0.034% | $0.34 |
| F Fund | 0.034% | 0.000% | 0.034% | $0.34 |
| C Fund | 0.034% | 0.001% | 0.035% | $0.35 |
| S Fund | 0.034% | 0.013% | 0.047% | $0.47 |
| I Fund | 0.033% | 0.006% | 0.039% | $0.39 |
How this compares: The average 401(k) plan charges between 0.50% and 1.50% in fees. If you have $100,000 invested in the TSP C Fund, you pay approximately $35 per year in fees. The same balance in a typical 401(k) charging 1% would cost you $1,000 annually—nearly 30 times more.
Over a 30-year career, these fee savings compound significantly. According to the TSP’s own data, less than 1% of the roughly 170,000 investment funds tracked by financial data services have lower expense ratios than the TSP.
Risk vs. Return Analysis
Understanding the relationship between risk and return helps set appropriate expectations for each fund.
Historical Volatility and Returns
| Fund | Annualized Volatility | Best Year (Recent) | Worst Year (Recent) |
|---|---|---|---|
| G Fund | ~0% | 4.52% (2024) | 0.97% (2020) |
| F Fund | ~5-7% | 7.51% (2020) | -12.83% (2022) |
| C Fund | ~15-18% | 28.68% (2021) | -18.13% (2022) |
| S Fund | ~20-24% | 31.84% (2020) | -26.26% (2022) |
| I Fund | ~18-20% | 32.45% (2025) | -13.94% (2022) |
Key insight: The S Fund has the highest volatility of all TSP funds, meaning it experiences the largest swings in both directions. While it posted the worst 2022 loss (-26.26%), it also posted one of the best gains in 2020 (+31.84%).
I Fund Benchmark Change: What It Means
In late 2024, the I Fund completed a significant transition from its previous benchmark (the MSCI EAFE Index) to the new MSCI ACWI IMI ex USA ex China ex Hong Kong Index. This change fundamentally altered what the I Fund invests in.
Before vs. After the Change
| Characteristic | Old Benchmark (MSCI EAFE) | New Benchmark (MSCI ACWI IMI ex USA ex China ex HK) |
|---|---|---|
| Number of stocks | ~800 | ~5,500 |
| Countries covered | 21 developed markets | 44 developed and emerging markets |
| Company sizes | Large and mid-cap only | Large, mid, and small-cap |
| Emerging markets | No | Yes (Brazil, India, Mexico, etc.) |
| Canada included | No | Yes |
| China/Hong Kong | Hong Kong only (~2%) | Excluded |
Why China and Hong Kong are excluded: The decision to exclude these markets was driven by political and national security concerns raised by Congress and the Trump administration in 2020. The Federal Retirement Thrift Investment Board (FRTIB) ultimately adopted a new index that excludes these markets entirely.
Impact on performance: The expanded benchmark has contributed to the I Fund’s strong 2025 performance. The addition of emerging markets and Canadian stocks provided exposure to faster-growing economies, while the exclusion of China may have benefited returns given China’s challenging economic conditions.
TSP Allocation Strategies
There’s no single “best” allocation—the right mix depends on your age, risk tolerance, and time until retirement. Here are some common approaches:
Aggressive Growth (20+ Years to Retirement)
- C Fund: 50%
- S Fund: 30%
- I Fund: 20%
This allocation maximizes exposure to stocks for long-term growth. The heavy C Fund weighting provides stability within equities, while S Fund and I Fund add growth potential.
Moderate Growth (10-20 Years to Retirement)
- C Fund: 40%
- S Fund: 20%
- I Fund: 15%
- F Fund: 15%
- G Fund: 10%
This balanced approach maintains strong equity exposure while introducing bonds for stability as retirement approaches.
Conservative (Under 10 Years to Retirement)
- G Fund: 30%
- F Fund: 20%
- C Fund: 30%
- S Fund: 10%
- I Fund: 10%
This allocation prioritizes capital preservation while maintaining some growth potential to combat inflation.
For a complete guide to TSP contribution strategies and BRS matching, see our Military TSP Guide 2026.
L Fund Performance
The Lifecycle (L) Funds provide a professionally managed allocation across all five individual funds, automatically becoming more conservative as the target date approaches.
2025 L Fund Returns
| Fund | 2025 Return | Stock Allocation (Approx.) |
|---|---|---|
| L Income | 9.36% | ~30% |
| L 2030 | 15.17% | ~55% |
| L 2035 | 16.27% | ~60% |
| L 2040 | 17.31% | ~70% |
| L 2045 | 18.20% | ~75% |
| L 2050 | 19.07% | ~80% |
| L 2055 | 21.87% | ~85% |
| L 2060 | 21.88% | ~90% |
| L 2065 | 21.88% | ~90% |
| L 2070 | 21.89% | ~90% |
| L 2075 | 10.92% | ~90% |
Note: L Funds with later target dates (L 2055 through L 2070) performed nearly identically in 2025 because they all have similar aggressive allocations at this stage. As the target date approaches, allocations shift toward bonds and the G Fund.
The L 2025 Fund was retired in June 2025, with its assets rolled into the L Income Fund.
Frequently Asked Questions
Over the long term, the C Fund (S&P 500) has been the most consistent performer, averaging approximately 10-11% annual returns over the past 20+ years. However, individual years vary significantly—the S Fund holds the record for the highest single-year return at 42.92% in 2003.
The G Fund is excellent for capital preservation—it has never lost money. However, its returns typically trail inflation during low-rate environments. It’s best used as part of a diversified portfolio, particularly for those nearing retirement or as a safe haven during market volatility.
Several factors contributed: the expanded benchmark index (adding emerging markets and more diversification), a weakening U.S. dollar that boosted international returns, and strong performance in European and emerging market equities. The exclusion of China from the benchmark may have also helped, given China’s economic challenges.
While the C Fund has strong long-term returns, concentrating 100% in any single fund increases risk. During 2022, the C Fund lost 18.13%—a significant hit if you were planning to retire. Diversification across funds helps manage risk while still capturing market growth.
TSP expense ratios (0.034%-0.047%) are comparable to or lower than the lowest-cost index funds at Vanguard or Fidelity. For example, Vanguard’s Total Stock Market Index Fund (VTSAX) has an expense ratio of 0.04%—essentially the same as TSP. This makes the TSP one of the best retirement vehicles available anywhere.
Yes, you can roll your TSP balance into a traditional IRA or Roth IRA after separating from service. However, consider keeping your TSP open—the ultra-low fees are hard to match elsewhere. You can also roll money FROM an IRA or 401(k) INTO your TSP.
Disclaimer: This article is provided by USMilitary.org, an independent educational resource. We are not affiliated with the Federal Retirement Thrift Investment Board, TSP, or any government agency. Past performance does not guarantee future results. For official TSP information, visit TSP.gov.