TSP G Fund

An overview of TSP G Fund

This fund’s investment objective is ensure there is a rate of return produced that is higher than inflation. It also makes sure this is done while avoiding exposure to risk and market price fluctuations. The G Fund deals specifically in government securities. Specifically, the G Fund invests in only nonmarketable short-term U.S. Treasury securities. The earnings of this TSP consists entirely of the interest income on the security only. This does not mean there is no risk. The G Fund is subject to inflation risk, or the possibility that your G Fund investment will not grow enough to offset the reduction in purchasing power that results from inflation.

The payment of this TSP's principal and interest is guaranteed by the U.S. Government, meaning that the U.S. Government will always make the required payments. If you are the holder of a G Fund, your   investment is not subject to credit (default) risk.
The interest rate for the G Fund is calculated using the weighted average yield of all outstanding Treasury notes/bonds that are four or more years in maturity. As a result, those who invest in a G Fund receive a long-term rate on what is considered a short-term security. The long-term interest rates are normally higher than short-term rates; thus, a higher yield.
These funds are truly unique government securities. As stated they are not available to the general public and are backed by the full faith and credit of the US Government. The G Fund has been with the program from its initial established. The TSP, and the G Fund, began operations/offerings on April 1, 1987.