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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.

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.

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