Seeing how badly even short term bonds have gotten slaughtered in this downturn has made me pretty jaded. They'll have a much smaller role in my asset allocation going forward. Probably no more than 30% of my portfolio even in retirement.
You're clearly confused. The TSP G Fund[1] is comprised of 100% nonmarketable short-term Treasuries specially issued to the TSP; 10-year T-notes don't exist in its composition whatsoever. and its nominal return over any arbitrary period has never been negative...in other words, bond duration risk simply isn't applicable to the fund. Furthermore:
>> The G Fund rate is calculated by the U.S. Treasury as the weighted average yield of approximately 183 U.S. Treasury securities on the last day of the previous month.
https://www.govexec.com/pay-benefits/2023/05/tsp-g-fund-debt...
If you were 100% allocated in TSP G Fund and Treasury yields spiked across the curve, your account balance never goes down and you could withdrawal the entire amount at any time without losing a single penny.
If you were 100% allocated in 10-yr T-notes and Treasury yields spiked across the curve, well...you'd be swallowing a substantial loss proportional to your unhedged duration exposure if you were either to liquidate your position before maturity or before yields normalize.
This[1] is what you don't understand.
How about equivalent risk-free return, even better yield, upside potential, optionality...and you don't need to be a federal employee to play?
It's been hiding in plain sight[1][2] for over a year now, but I'm not a financial advisor and certainly not your financial advisor...just an interwebs rando with a hobby positing food for critical thought.
If you would ever consider bonds wouldn’t now be one of the best time ever to buy them? (unless you believe interest rates could sill go up significantly)