Strategies & Capabilities

Defining Collective Investment Trusts (CITs)

CITs are pooled investment vehicles offered to certain qualified retirement plans and managed collectively in accordance with a common investment strategy. CITs may offer lower expenses and more pricing flexibility than mutual funds, and differ in how they are managed, regulated, priced and reported.

Institutional Appeal

DC plan sponsors are embracing CITs with 78% of surveyed DC plans offering at least one CIT in 2020, up from 44% in 2011.¹ In addition to providing the potential for lower overall costs, CITs may also be gaining plan sponsors’ notice by offering more options for accessing institutional-quality investment strategies while maintaining ERISA fiduciary standards. Finally, these vehicles are no longer exclusively for corporate DC mega plans, but now have broader application across plan size and type.

Demystifying the CIT for Plan Participants

Participant outreach considerations when making the switch from a mutual fund to a CIT.

Heritage & Capabilities

At State Street, we offer defined contribution plans an array of vehicles, including separately managed accounts, CITs and mutual funds. As an institutional investment manager, State Street delivers depth within the CIT category, as reflected by our CIT target date fund tenure and our strategic approach. We offer securities lending on more than half of the available CIT strategies and encourage plan sponsors to explore the tax benefits associated with foreign dividends on international indexed equities.

1991

Launched Inaugural CIT

$491

Billion in US DC CIT AUM ²

58%

of 55 CITs allow securities lending

Source: State Street Global Advisors.

View Our Core Index Collective Trusts

For more information on how CITs can work for your clients or participants, contact SSGADefinedContribution@ssga.com.

CIT vs Mutual Funds

CIT and Mutual Fund Characteristics At-A-Glance

	CITs	Mutual Funds
What They Are	Commingled investment vehicles typically maintained by a bank or trust company and offered only to certain qualified retirement plans	Commingled investment vehicles typically maintained by an asset management company and available to most retirement plans as well as the general public
Oversight and Regulation	Often regulated by the Office of the Comptroller of Currency (OCC) and the IRS and Department of Labor (DOL) Fund trustee can be subject to ERISA standards aimed at protecting plan participants	Regulated by the Securities and Exchange Commission (SEC), among other statutes, under the Investment Company Act of 1940, as amended Manager not held to ERISA standards
Governing Documents	May be governed by a declaration of trust and investment/operating guidelines For participants, usually provide fund fact sheets or work with third-party provider to create them	Primarily a prospectus and statement of additional information For participants, usually provide fund fact sheets or work with third-party provider to create them
Reporting	Audited financial statements Subject to DOL and ERISA reporting requirements, including but not limited to Form 5500 Schedule C and Sections 404a-5 and 408(b)(2) of ERISA	Annual report Subject to DOL and ERISA reporting requirements, including but not limited to Form 5500 Schedule C and Sections404a-5 and 408(b)(2) of ERISA
Fee Structure	May have multiple share classes Potential for negotiated pricing arrangements	May have multiple share classes
Trading	Most can trade via National Securities Clearing Corporation (NSCC) Usually daily valuation	NSCC trading Usually daily valuation

Source: State Street Global Advisors

Footnotes

Disclosures

Important Risk Information

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The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.

Assumptions and forecasts used by SSGA in developing the Portfolio’s asset allocation glide path may not be in line with future capital market returns and participant savings activities, which could result in losses near, at or after the target date year or could result in the Portfolio not providing adequate income at and through retirement.

SSGA Target Date Fund are designed for investors expecting to retire around the year indicated in each fund’s name.When choosing a Fund, investors should consider whether they anticipate retiring significantly earlier or later than age 65 even if such investors retire on or near a fund’s approximate target date. There may be other considerations relevant to fund selection and investors should select the fund that best meets their individual circumstances and investment goals. The funds’ asset allocation strategy becomes increasingly conservative as it approaches the target date and beyond. The investment risks of each Fund change over time as its asset allocation changes.

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