The C Fund's investment objective is to match the performance of the Standard and Poor's 500 (S&P 500) Index, a broad market index made up of stocks of 500 large to medium-sized U.S. companies.
The C Fund assets are held in a separate account and managed to fully replicate the Standard and Poor's 500 (S&P 500) Index. The earnings consist primarily of dividend income and gains (or losses) in the price of stocks.
The C Fund is a passively managed fund that remains invested according to its indexed investment strategy regardless of stock market movements or general economic conditions.
Your investment in the C Fund is subject to market risk because the prices of the stocks in the S&P 500 Index rise and fall.
By investing in the C Fund, you are also exposed to inflation risk, meaning your C Fund investment may not grow enough to offset inflation.
While investment in the C Fund carries risk, it also offers the opportunity to experience gains from equity ownership of large and mid-sized U.S. company stocks.
How can I use the C Fund in my TSP account?
The C Fund can be useful in a portfolio that also contains stock funds that track other indexes such as the S Fund (which tracks an index of small U.S. company stocks) and the I Fund (which tracks an index of international stocks). The C, S, and I Funds track different segments of the overall stock market without overlapping. This is important because the prices of stocks in each market segment don't always move in the same direction or by the same amount at the same time. By investing in all segments of the stock market (as opposed to just one), you reduce your exposure to market risk.
The C Fund can also be useful in a portfolio that contains bonds. Again, it is because the prices of stocks and bonds don't always move in the same direction or by the same amount at the same time. So a retirement portfolio that contains a bond fund like the F Fund, along with other stock funds, like the S and I Funds, will tend to be less volatile than one that contains stock funds alone.
Need more info?
For more detailed information about the C Fund, see the C Fund Information Sheet.