Should You Invest in the Mutual Fund Window?
In June 2022, the TSP completely revamped its website, mobile app, help desk support, and added some long overdue enhancements. One of the much anticipated enhancements was the Mutual Fund Window (MFW).
The MFW is an account that is separate from core TSP. It is accessed through your TSP.gov account but you are then re-directed to a third party platform. The MFW gives TSP investors access to a menu of close to 5,000 mutual funds including a majority of asset classes. While the MFW opens up a whole new world of potential investing options to TSP investors, there are associated restrictions and fees.
TSP investors are allowed to transfer a maximum of 25% of their TSP funds into the MFW, with a minimum transfer of $10,000. That means that employees with less than $40,000 in their core account are not eligible to utilize the window. There are annual maintenance fees totaling $150 and a per transaction fee of $28.75. The fees and transaction costs are taken directly from your MFW account. Clearly, the more you have in your MFW account, the less impactful the fees on a percentage basis.
For savvy TSP investors, the MFW has the potential to significantly outperform the core TSP funds. There are any number of strategies that can be employed within the MFW that are not possible within core TSP. Most importantly, investors can use the window to diversify their core TSP holdings or concentrate in specific asset classes. Investors who are looking for exposure to the energy sector, long dated treasury bonds, the tech sector, bitcoin, etc..can find it all in the MFW. For example:
While the C fund, S fund, I fund, and F funds were in the midst of a bear market in 2022, the energy sector was booming! ProFunds Oil & Gas (ticker symbol ENPIX), available in the MFW, returned investors almost 100% in 2022.
While the MFW can help supercharge your TSP balance, there are some very significant risks! Buying and selling in the MFW is no different than in your brokerage account. With the ability to enjoy big gains comes the risk of big losses...
The MFW can be used in a variety of ways to diversify, hedge, or supercharge your TSP account. HOWEVER, the risk of loss is very real without a well designed investment strategy.
Is investing in the Mutual Fund Window right for you?
The MFW is an account that is separate from core TSP. It is accessed through your TSP.gov account but you are then re-directed to a third party platform. The MFW gives TSP investors access to a menu of close to 5,000 mutual funds including a majority of asset classes. While the MFW opens up a whole new world of potential investing options to TSP investors, there are associated restrictions and fees.
TSP investors are allowed to transfer a maximum of 25% of their TSP funds into the MFW, with a minimum transfer of $10,000. That means that employees with less than $40,000 in their core account are not eligible to utilize the window. There are annual maintenance fees totaling $150 and a per transaction fee of $28.75. The fees and transaction costs are taken directly from your MFW account. Clearly, the more you have in your MFW account, the less impactful the fees on a percentage basis.
Should You Invest in the Mutual Fund Window?
The MFW is completely separate from your core TSP account. The reallocation restrictions that apply to your core TSP account do not apply to the MFW. You are free to buy and sell mutual funds as often as you like, keeping in mind the per transaction fee. Additionally, the "Noon Rule" does not apply. You can buy or sell a mutual fund at any time during the trading day and get that day's closing price. Like the core TSP funds, mutual funds are valued at the close of each trading day. There is no intra-day price for mutual funds like there is for Exchange Traded Funds (ETFs).For savvy TSP investors, the MFW has the potential to significantly outperform the core TSP funds. There are any number of strategies that can be employed within the MFW that are not possible within core TSP. Most importantly, investors can use the window to diversify their core TSP holdings or concentrate in specific asset classes. Investors who are looking for exposure to the energy sector, long dated treasury bonds, the tech sector, bitcoin, etc..can find it all in the MFW. For example:
While the C fund, S fund, I fund, and F funds were in the midst of a bear market in 2022, the energy sector was booming! ProFunds Oil & Gas (ticker symbol ENPIX), available in the MFW, returned investors almost 100% in 2022.
While the MFW can help supercharge your TSP balance, there are some very significant risks! Buying and selling in the MFW is no different than in your brokerage account. With the ability to enjoy big gains comes the risk of big losses...
The MFW can be used in a variety of ways to diversify, hedge, or supercharge your TSP account. HOWEVER, the risk of loss is very real without a well designed investment strategy.
Is investing in the Mutual Fund Window right for you?
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