The Thrift Savings Plan Fixed Income Index Investment Fund, or F Fund for short, is a bond-based investment with relatively low risk, that exceeds the returns of money market funds over the long term. By law, it must be invested in fixed-income securities.
The objective of the F Fund is to match the performance of the Barclays Capital U.S. Aggregate Bond Index. The earnings are comprised of interest income on the securities, and gains, or losses, in the value of the securities. The risk in the F Fund is primarily due to market risk of the underlying securities declining in value, and due to prepayment risk (payment of the bond before it matures). The risk of nonpayment of the bonds (credit risk) is very low, because only investment-grade securities are used and there is broad diversification.
The bond portfolio is comprised of 40% government-related Treasury and Agency bonds (government- and corporate-issued, government-backed), 30% asset-backed securities (mortgages, credit cards, auto/home loans, etc.), and 30% corporate and non-corporate bonds (standard credit).
The 10-Year (2005-2014) annual return was 4.89%, and since its inception in January 1988, it has gained 6.66%. There is about $24 Billion of assets in the F Fund, which charges 2.9 basis points ($0.29 per $1000) to manage. It is administered by the BlackRock Institutional Trust Company.
The average duration of the bonds is about 5 years and the yield at maturity is 2.25%.
Both the Plus and Basic utilize the F Fund during downturns in the stock market, and is a solid option for good gains during these times.