As retirement plan sponsors and fiduciaries face mounting pressure to deliver cost-effective, high-performing investment options, Collective Investment Trusts (CITs) have emerged as a powerful solution. Once considered niche, CITs now account for over $7 trillion in defined contribution assets as of late 2024. With their competitive fees, operational flexibility, and institutional-grade strategies, CITs are reshaping how retirement plans are structured—and Comerica Trust has been at the forefront of this evolution for over four decades.
Key takeaways:
- CITs now surpass mutual funds as the most-used target-date vehicle in defined contribution plans
- Lower operational costs and fewer regulatory burdens make CITs a cost-efficient choice
- CITs offer daily valuation, improved transparency, and access to alternative strategies
- SECURE 2.0 Act proposals may expand CIT eligibility to 403(b) plans
- Comerica Trust brings 40+ years of CIT experience and industry-leading service
What Is a Collective Investment Trust?
A Collective Investment Trust (CIT), also known as a Collective Investment Fund (CIF), is a tax-exempt pooled investment vehicle maintained by a bank or trust company. CITs are available exclusively to qualified retirement plans under ERISA, such as 401(k)s and governmental plans. Individual investors cannot purchase CITs directly—they must access them through employer-sponsored plans.
CITs pool retirement assets to invest in a diversified portfolio of securities, including stocks, bonds, and alternatives. This structure allows for institutional pricing, professional management, and broad diversification.
CITs vs. Mutual Funds: similarities and differences
Shared Features:
- Professionally managed pooled investment vehicles
- Daily valuation and NSCC trading compatibility
- Multiple share classes and quarterly fact sheets
- Subject to fiduciary oversight and regulatory standards
Key differences:
- Regulation: CITs are overseen by the OCC and state banking regulators, not the SEC
- Cost efficiency: CITs avoid SEC registration and prospectus requirements, reducing legal and compliance costs
- Flexibility: CITs can include alternative assets and private credit strategies not typically available in mutual funds
- Transparency: Modern CITs offer daily pricing and improved reporting, addressing past concerns
Historical milestones
- 1927: First CIT launched
- 1936: IRS grants tax-exempt status to qualifying CITs
- 2000: CITs begin trading on NSCC platform
- 2019: Nasdaq registers first CIT tickers
- 2024: CITs surpass mutual funds in target-date fund usage
- 2025: SECURE 2.0 Act reintroduced, proposing CIT access for 403(b) plans
Why plan sponsors and fiduciaries choose CITs
CITs offer a compelling combination of lower fees, faster product launches, and access to institutional strategies. They are especially attractive for target-date funds, custom investment lineups, and plans seeking to integrate private credit or ESG strategies.
With increasing scrutiny on plan costs and performance, CITs provide a flexible, scalable solution that aligns with fiduciary responsibilities.
Comerica Trust: your CIT partner
With over 40 years of experience offering CITs, Comerica Trust delivers the expertise, service, and innovation plan sponsors and fiduciaries need. Our Institutional Trust team supports hundreds of clients with tailored CIT solutions that align with their goals and regulatory requirements.
Ready to explore how CITs can enhance your retirement plan?
Contact your Comerica Relationship Manager or reach out to Comerica Trust to speak with a CIT specialist today.
Sources:
Understanding Collective Investment Trusts – Cohen & Co. SEI White Paper on CITs Neuberger Berman: What You Need to Know About CITs OCC Comptroller’s Handbook SEC NSCC Filing Nasdaq CIT Ticker Announcement
https://www.cohenco.com/knowledge-center/insights/may-2025/understanding-collective-investment-trusts-alternative-strategies
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