Looking at the couch potato funds, does that mean I should shift what is in G fund to the F fund? But I also hear now is not a good time to invest in bond funds...
I wouldn't do it now, at least in one lump. You could consider dollar cost averaging from the G to the F.
There are a few issues here. First off, the F fund pays a higher return partly because it invests in longer term bonds and partly because it invests in somewhat riskier bonds. Longer term bonds will decline in price when interest rates rise, which they eventually will. But that probably will not happen for at least 2-4 years. Until then you are missing an opportunity and that is actually costing you money.
If you are truly risk adverse and opposed to market timing then you might not be comfortable with switching and deciding when and how to switch because that is, by definition, timing. That decision will cost you a couple of percent of your balance per year. There is nothing at all wrong with that but I do believe you should recognize it.
The Federal Reserve is meeting today and tomorrow. On the agenda is whether to continue "Operation Twist." That operation is intended to (and actually is) pushing long term interest rates down and that causes the prices of long term bonds to go up. If they decide to continue that operation then bonds probably will go up for at least another 6 months to a year.
I'd like to be able to give you a straight answer. But with bonds it is essentially impossible not to time the market. When you make a choice to invest in bonds you also have to choose the maturity period (long, intermediate, or short). There's really no way around it. And, the most "conservative" bonds, 30 year US Treasuries are also the ones that fluctuate the most in price as interest rates change. So your statement that you are a conservative, risk-adverse investor makes it difficult to suggest that you involve yourself with bonds until you understand them and are comfortable with their behavior. The reality is that, even though they fluctuate in price, much of the fluctuation is NOT random. The arguments against timing usually come down to the unpredictability of random behavior. So basically, if you think you should switch to something else I'd rather you read a bit about bonds and decide for yourself what you are most comfortable with.