Note: Look for a low UI and Mdd and a high Return and UPI as keys to best performance.
In Table XXI we have provided the 22 year results of the new TSP L Funds, assuming the TSP Board had made them available then, using with a series of performance and risk metrics. Included for sake of comparison to each standard TSP L Fund is a very basic, long-term market timing model.
Since the TSP's L Funds were just released in August of 2005, alternative proxy funds were used for this analysis taking the history back to 1988; since the TSP L Funds are comprised of simple and static formulations, the chosen proxy funds would track almost exactly with the TSP's new offerings.
While our L Fund market timing models, provided for example only, are not as sophisticated as the TSP Pilot Portfolios, they do show the important benefit of adding even a very basic, long-term market timing signal to each of these new TSP L Fund portfolios.
In each case a basic, long-term computer timing model applied to each of the L Funds would have increased performance and decreased risk substantially requiring only about one switch per year from the L Fund to the safe-harbor G Fund.
These generic "timed models" show what a major impact market timing can have on performance and risk exposure. For each TSP L Fund you can see that the addition of a very basic timing model would have reduced the market risk (Mdd) by 75%!
Even following such a very basic long-term timing model would have saved TSP investors from the huge losses that would have occurred sitting through the devastating 2000-2003 bear market that began after the bust of the high-tech bubble and again in 2007-2009.
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