the S Fund .. what is it?

The Thrift Savings Plan (TSP) Small Capitalization Stock Index Investment Fund, or S Fund, offers fairly high returns by investing in small and medium size U.S. companies. The goal of the fund is to match the performance of the Dow Jones U.S. Completion Total Stock Market (TSM) Index, which is a very broad market index of stocks that are not included in the S&P 500. There is a risk of loss in the S Fund when the company stock prices decline.

For efficiency in fund management, most of the largest companies in the TSM Index ($1B market value) are included in the S Fund. And a mathematical formula selects the other smaller companies so that the diversity of the TSM Index is preserved in the S Fund. There is also a percentage of the funds that are invested in liquid futures contracts that allow for daily participant fund activity (interfund transfers and withdrawals).

The 10-year (2005-2014) annual return is 9.44% and is 9.19% since its inception in May 2001. There is about $50 Billion in assets in the fund and it charges 2.9 Basis Points, or $0.29 per $1000 fund balance. The S Fund is invested in an account managed by BlackRock Institutional Trust Company.

Here is the breakdown of the type of stocks invested by the S Fund (as of March 2015):
Financials – 23%
Information Technology – 16%
Consumer Discretionary – 16%
Industrials – 15%
Health Care – 13%
Materials – 6%
Energy – 4%
Utilities – 3%
Consumer Staples – 3%
Telecom – 2%

The 10 largest companies in the S Fund are (as of December 2014):
American Airlines Group, Inc. (wiki)
Hospital Corporation of America (HCA) Holdings, Inc. (wiki)
Liberty Global Plc Class C (wiki)
Graphic Packaging Holding Co. (wiki)
Illumina, Inc. (wiki)
Tesla Motors, Inc. (wiki)
United Continental Holdings, Inc. (wiki)
Las Vegas Sands Corporation (wiki)
LinkedIn Corporation Class A (wiki)
Twitter, Inc. (wiki)

The TSPinvestor Basic and Plus invest in the S Fund heavily during boom times in the stock market – its returns are quite impressive.

TSP Fund Information – March 2015
Dow Jones U.S. Completion TSM Index