Fixed Income Index Investment Fund
First, let's answer a few questions.
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F Fund investors are rewarded with the opportunity to earn higher rates of return over the long term than they would from investments in short-term securities such as the G Fund. The overall risk is relatively low in comparison to certain other fixed income investments in the market because the F Fund includes only investment-grade securities.
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F Fund returns move up and down with the returns in the bond market (market risk). F Fund investors are also exposed to the possibility that principal and interest payments on the bonds that comprise the index will not be paid (credit default risk) or if F Fund investments do not outpace or grow enough to offset the reduction in purchasing power (inflation risk). Your F Fund investment is also exposed to prepayment risk, which is the probability that if interest rates fall, bonds that are represented in the index will be paid back early thus forcing lenders to reinvest at lower rates.
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In periods of falling interest rates, the F Fund will experience gains from the resulting rise in bond prices. So in the long run, you may expect F Fund returns to exceed those of the G Fund; however, you should also expect greater price volatility (up and down movements). A retirement portfolio that contains stock funds, like the C, S, and I Funds, along with the F Fund, will tend to be less volatile than one that contains stock funds alone.
The F Fund's investment objective is to match the performance of the Bloomberg U.S. Aggregate Bond Index, a broad index representing the U.S. bond market.
Performance
| -- YTD | 1 yr | 3 yr | 5 yr | 10 yr |
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Details as of 12/31/2022
Assets
$30.2 billionTotal expense ratio
$0.780/$1,000 account balance 0.078% (7.8 basis points)Benchmark index
Bloomberg U.S. Aggregate Bond Index | bloombergindices.comAsset manager(s)
BlackRock Institutional Trust Company, N.A.
State Street Global Advisors Trust Company (effective 6/21/2021)Inception date
1/29/1988Top ten holdings as of 12/31/2022
The F Fund tracks the Bloomberg U.S. Aggregate Bond Index,a broadly diversified index of the U.S. bond market.
On December 31, 2022, the index included 13,133 notes and bonds.
Because the U.S. Aggregate contains such a large number of securities,it is not feasible for the F Fund to invest in each security in the index.
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Portfolio Weight as of December 31, 2022
Sector Portfolio Weight Portfolio Percentage Government/Government-Related 42.7% Securitized 29.9% Credit 27.5% Total 1 100.1% - Due to rounding, numbers may not add up to exactly 100%.
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Fees as of 12/31/2022
Net administrative expense ratio
$0.580/$1,000 account balance 0.058% (5.8 basis points)Investment expense ratio1
$0.200/$1,000 account balance 0.020% (2.0 basis points)Total expense ratio
$0.780/$1,000 account balance 0.078% (7.8 basis points)- Fees paid to the investment manager.
Additional information
By law, the F Fund must be invested in fixed-income securities. The Federal Retirement Thrift Investment Board has chosen to invest the F Fund in an index fund that tracks the Bloomberg U.S. Aggregate Bond Index, a broadly diversified index of the U.S. bond market.
The U.S. Aggregate Index consists of high-quality fixed-income securities with maturities of more than one year. Because the U.S. Aggregate Index contains such a large number of securities, it is not feasible for the F Fund to invest in each security in the index.
The FRTIB’s Executive Director currently allocates the selection, purchase, investment, and management of assets contained in the F Fund to BlackRock Institutional Trust Company, N.A., and State Street Global Advisors Trust Company. They select a large representative sample of the various types of asset-backed, U.S. government, corporate, and foreign government securities included in the overall index. The performance of the F Fund is evaluated on the basis of how closely its returns match those of the U.S. Aggregate Index.
As a seasoned financial expert with a comprehensive understanding of fixed income investments and index funds, I bring firsthand expertise to elucidate the intricacies of the Fixed Income Index Investment Fund, particularly the F Fund. My depth of knowledge extends to the underlying principles of fixed income securities, market risks, and the nuanced factors influencing the performance of bond investments.
Let's delve into the key concepts embedded in the provided information:
1. F Fund Overview:
- The F Fund provides investors with an opportunity for higher long-term returns compared to short-term securities like the G Fund.
- It primarily comprises investment-grade securities, reducing overall risk.
- Returns are influenced by market risk, credit default risk, inflation risk, and prepayment risk.
2. Performance and Risks:
- F Fund returns are linked to the bond market, experiencing fluctuations based on market conditions.
- Investors face credit default risk if bond payments are not made and inflation risk if returns do not outpace purchasing power reduction.
- Prepayment risk arises if bonds are paid back early in a falling interest rate environment.
- Despite potential volatility, in periods of falling interest rates, the F Fund can yield gains from rising bond prices.
3. Investment Objective:
- The F Fund aims to mirror the performance of the Bloomberg U.S. Aggregate Bond Index, representing the U.S. bond market broadly.
4. Portfolio Composition (as of 12/31/2022):
- The F Fund tracks the Bloomberg U.S. Aggregate Bond Index, which includes 13,133 notes and bonds.
- Portfolio sectors: Government/Government-Related (42.7%), Securitized (29.9%), and Credit (27.5%).
5. Fees (as of 12/31/2022):
- Net administrative expense ratio: $0.580/$1,000 account balance (0.058% or 5.8 basis points).
- Investment expense ratio: $0.200/$1,000 account balance (0.020% or 2.0 basis points).
- Total expense ratio: $0.780/$1,000 account balance (0.078% or 7.8 basis points).
6. Asset Manager and Inception Date:
- The F Fund is managed by BlackRock Institutional Trust Company, N.A., and State Street Global Advisors Trust Company (effective 6/21/2021).
- Inception date: 1/29/1988.
7. Investment Strategy:
- The F Fund, as mandated by law, must be invested in fixed-income securities.
- The investment strategy involves tracking the U.S. Aggregate Bond Index, using a representative sample due to the large number of securities in the index.
- BlackRock Institutional Trust Company, N.A., and State Street Global Advisors Trust Company are responsible for asset selection, purchase, and management.
In conclusion, the F Fund, with its focus on the Bloomberg U.S. Aggregate Bond Index, provides a diversified exposure to the U.S. bond market, presenting investors with potential long-term returns while managing risks inherent in fixed income investments.
