Let me tell you a secret
So the iFund for the Thrift Savings Plan, it doesn't really invest in what you think it does
So for like a decade, I had the iFund as part of my TSP portfolio
And I was excited because I was getting international exposure. And that was like in the early 2000s
when international stocks were doing better than domestic stocks. And there was like all this excitement
about all these countries, like these BRICS countries, like Brazil, Russia, India, China, and all this other stuff
And I was like, all you heard on this side channel. But my TSP just wasn't really doing anything
So like in this video, I'm gonna explain what the iFund and the TSP is all about
and why you might not wanna use it or why you might want to use it
But at least you're gonna understand better what it's all about. This is just a reminder that I am just a guy on YouTube
I am not a financial advisor and I'm definitely not giving you financial advice
over YouTube. So just enjoy my video. Hopefully you learn a few things
It's meant to be educational, but definitely check with a professional before making a big life decision
So the iFund and the TSP does stand for international. So the iFund invests in international stocks
But it doesn't invest in all international stocks. So the iFund invests in this index
called the M-S-C-I-E-A-F-E index. And the E-A-F-E stands for Europe, Australasia, and Far East
So, and it doesn't invest in China. So it's really just Japan in the Far East
Australia and New Zealand, that's Australasia, and then Europe. So it's really investing in those European countries
I guess in this Hong Kong too, that's one of the other countries, and Singapore are in the Far East
So, but really it's kind of a Western European fund. And if you look at what the iFund holds
the biggest companies in there are like multinational corporations that you've heard of
So there's like Toyota, that's the biggest one. Nestle, there's LVMH. So that has like Louis Vuitton
and some other luxury brands. AstraZeneca, pharmaceutical company, and then Sony. So those are the top five holdings in the iFund
And those are a lot of companies that are very similar to ones that are in the S&P 500
Like Sony competes with Apple and Microsoft. AstraZeneca competes with Pfizer and British Motor Squibb
Nestle is kind of similar to General Mills and Kellogg's. And like Kellogg's, Apple, Microsoft, Pfizer
those are all in your C fund in your TSP. So really in a lot of ways
the iFund is just investing in these really big companies that are in Europe and Japan, Hong Kong
And it's kind of duplicating those big funds. Again, if you're already investing in the C fund
And you should also know that the iFund has a higher expense ratio than the C fund
and it's kind of investing in the same companies. So you should really kind of think about that
before you invest in the iFund. So let's take a look at the performance of the iFund
over the past 10 years. So since 2011, I'm recording this in early 2022
the C fund has been kicking butt. It's like gone up 450% in a decade, which is incredible
And the iFund also has been going up, just hasn't been going up as much as the C fund
So if you're investing in the iFund, you're paying that extra expense fees
for quote unquote diversification, international diversification. And it's not performing as well as domestic stocks
Now that's not saying it's forever. We can take a look at what was going on
in the previous 10 years before this. So in 2001 to 2011, the iFund actually outperformed
the C fund. If we can go back in our mental time machine
there was some kind of dot-com crash in the early 2000s, and the C fund and iFund both took a beating there
Coming out of that dot-com crash, the iFund outperformed the C fund for several years
And then both took quite a big hit during the 2008 financial crisis
and started to recover slowly heading into 2011. You can't base investment decisions off of past behavior
but you can take a look at, hey, this is what the C fund does
and this is what the iFund does. And financial advisors will tell you
to invest in international stocks because that gives you diversification that you're not getting in the US markets
And the iFund, while it is investing in companies that are based outside of the US
they're large multinational companies. And the C fund of the S&P 500
has quite a bit of international exposure because the companies in the S&P 500 are large
They're operating all over the world. They're just based in the United States
So there's a lot of overlap between the C and the iFund
The diversification might not be what you think it is. There's no emerging markets in the iFund
and emerging markets are something that can add a lot of growth to your portfolio
when the economy is raging, and they can also cause you really big drops
during the sessions. So those aren't in the iFund. So yeah, that's a quick overview of the iFund
I hope you learned a few things and why you may want to have it or may not want to have it in your portfolio
Hey, if this is good and you learned something, I'd love it if you'd hit like, subscribe
turn on post notifications, leave a comment. All that stuff really helps
And I hope to see you next time I record a video
Thanks so much