Federal Retirement Thrift Investment Board Members Is Delaying the Implementation of the (I) Fund Benchmark Change
Due to a meaningfully different economic environment related in large part to the impact of the global COVID-19 pandemic, as well as the nomination of three new Federal Retirement Thrift Investment Board Members, pending further study, the Federal Retirement Thrift Investment Board is delaying the implementation of the I Fund benchmark change to the MSCI ACWI ex-U.S. Investible Market index from the MSCI EAFE index.
In 2017 a decision was made to change the (I) Fund index from the MSCI Europe, Australasia and Far East Index to the more comprehensive MSCI All Country World Ex-US Investable Market Index, which includes investments in markets around the world, most notably Canada and China.
In a letter to Labor Secretary Eugene Scalia, from Natl. Economic Council Director, Larry Kudlow and Natl. Security Adviser, Robert O’Brien. It stated that the (I) Fund change would “expose the retirement funds to significant and unnecessary economic risk,” citing Chinese human rights abuses and the COVID-19 Pandemic.
The letter further states “The Chinese Government’s intentional thwarting of US investor protections should raise serious concerns about the reliability of financial information from Chinese companies and demonstrate significant concerns to investors, especially retail investors such as TSP beneficiaries of investing in the companies listed on the Chinese exchanges that would be represented in the new index”.
“The Federal Retirement Thrift Investment Board is set to implement these plans during a time of mounting uncertainty concerning China’s relations with the rest of the world, including the possibility that future sanctions will result from the culpable actions of the Chinese government with respect to the global spread of the COVID-19 pandemic,” they wrote.
Scalia wrote. “This now is the only acceptable course, given the concerns expressed by the president’s advisers and the chairs of the SEC and [accounting oversight board], as well, of course, as the president’s own directive to the board”.
