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Collective Investment Trusts Expand Product Usage

Managers of collective investment trusts are broadening the type of products used within these vehicles, which are becoming more complex, said Robert Muse, senior vice president of SEI Trust Company, during a webinar Wednesday.

“Without a doubt, we’re seeing more complexity; we’re seeing more niche products that investment managers are willing to wrap into a pooled fund vehicle and market in a CIT structure,” Muse said. “Definitely the diversity of investment products being used within the CIT structure is increasing.”

Several years ago, it was common to simply have stable value and domestic equity CITs, whereas now they cover a broad range of investments, including liquid alternatives.

A collective investment trust, or CIT, is an investment vehicle similar to a mutual fund but that is only available to qualified retirement plans.

There has been a resurgence in the use of CITs over the last 10 to 20 years, concentrated mainly among “mega plan sponsors,” or those with $1 billion or more in assets, Ruse said. These funds are regulated differently than mutual funds, so you don’t have the filings and registration documents that you see on the mutual fund side. That can translate to lower fees, which are often passed on to the retirement plan.

“Oftentimes quality investment managers are setting up vehicles both in a mutual fund structure and as well as a collective fund structure, thus creating a comparable investment experience,” Ruse said. 

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