The L Funds are intended to meet the investment needs of Thrift Savings Plan (TSP) participants with time horizons that fall into 10 different date ranges. The 10 L Funds were designed for the TSP by Mercer Investment Consulting, Inc.
The asset allocations are based on Mercer assumptions regarding future investment returns, inflation, economic growth, and interest rates. The TSP will review these assumptions at least annually and determine whether changes to the allocations are warranted.
L2065 thru L2025 are for participants with time horizons that fall within the defined date ranges. The asset allocations of these funds are adjusted quarterly, moving to a more conservative mix, gradually approaching that of the L Income Fund. Between quarterly adjustments, the asset allocation of each fund is maintained through daily rebalancing to that fund’s target allocation. When a fund reaches its horizon, it will roll into the L Income Fund, and a new fund will be added with a more distant time horizon. L Fund Allocations as of January 2023:
| L Income Fund | CONSTANT FORMULA |
|---|---|
| G | 69.84% |
| F | 5.66% |
| C | 12.81% |
| S | 3.11% |
| I | 8.58% |
L2025 (Inception Date 6/30/2020) 1/2023 | L2030 (Inception Date 8/1/2005) 1/2023 | |
|---|---|---|
| G | 55.46% | 33.67% |
| F | 6.08% | 6.21% |
| C | 19.98% | 31.10% |
| S | 5.02% | 7.98% |
| I | 13.46% | 21.04% |
L2035 (Inception Date 6/30/2020) 1/2023 | L2040 (Inception Date 8/1/2005) 1/2023 | |
|---|---|---|
| G | 27.02% | 20.93% |
| F | 7.04% | 7.32% |
| C | 33.98% | 36.84% |
| S | 8.88% | 9.80% |
| I | 23.08% | 25.11% |
L2045 (Inception Date 6/30/2020) 1/2023 | L2050 (Inception Date 1/31/2011) 1/2023 | |
|---|---|---|
| G | 15.47% | 10.64% |
| F | 7.78% | 7.61% |
| C | 39.17% | 41.59% |
| S | 10.72% | 11.55% |
| I | 26.86% | 28.61% |
L2055 (Inception Date 6/30/2020) 1/2023 | L2060 (Inception Date 6/30/2020) 1/2023 | |
|---|---|---|
| G | 0.51% | 0.45% |
| F | 0.48% | 0.54% |
| C | 50.31% | 50.31% |
| S | 14.05% | 14.05% |
| I | 34.65% | 34.65% |
L2065 (Inception Date 6/30/2020) 1/2023 | ||
|---|---|---|
| G | 0.37% | |
| F | 0.62% | |
| C | 50.31% | |
| S | 14.05% | |
| I | 34.65% |
The L Income Fund is designed to produce current income for participants who are already receiving money from their accounts through monthly payments and for participants who plan to withdraw or to begin withdrawing from their accounts in the near future. The asset allocation of the L Income Fund does not change over time, it is maintained through daily rebalancing. Over time, the L Funds (except for the Income Fund) will “roll down” the Efficient Frontier. That means that, as their allocations are adjusted each quarter, the funds shift, becoming less risky, until they eventually merge into the L Income Fund. The administrative expenses associated with the L Funds are those of the underlying G, F, C, S and I Funds, calculated in proportion to their allocations in each L Fund. The L Funds do not have any additional charges. There are no restrictions on investing in the L Funds. You may invest any part of your TSP account in any L Fund, and even invest in more than one L Fund. But it is recommended that you put your entire TSP account into just one L Fund – the one with the target date that is closest to your time horizon. Any other strategy may result in an asset allocation that is less than optimal, or which is not suited to your investment time horizon.
Remember, however, that risk and expected return are based on assumptions about future economic conditions and investment performance. There is no guaranteed rate of return for any period, either short-term or long-term.