A Collective Investment Trust (CIT) is also known as a commingled or Collective Investment Fund (CIF) or simply Collective Fund.  Collective Funds may invest in a wide variety of securities including stocks, bonds, exchange-traded funds, mutual funds, alternatives, other collective funds, and more.  Collective Funds are easily traded by any retirement plan custodian, which makes a CIF available to virtually every eligible retirement plan in the country.  A CIF is able to commingle the assets of all participating retirement plans to simplify trading in one account and to reduce costs.  These advantages are why Collective Funds can be a cost-efficient investment option for qualified retirement plans.

More on Collective Funds

  • Increasingly used in defined benefit (pension) plans and defined contribution (401k) plans.
  • Tax-exempt, pooled investment vehicles maintained by a bank or trust company exclusively for qualified plans, including 401(k)s, as well as for certain types of government plans.
  • Subject to banking regulations, not subject to the Investment Company Act of 1940.  Less regulated. Not registered with the SEC.
  • Can be less expensive for investors than actively-managed mutual funds, thanks to lower marketing, overhead and compliance-related costs.  Lesser profile.
  • Managed for the specific plans and are not available to the general public.  Market timing and other trading abuses tend to not be an issue.
  • Pension Protection Act of 2006 gave tailwind to CITs and approved them as default investment options for defined contribution plans.
  • Collective Trusts are unregistered investment vehicles, like hedge funds.  Mutual funds, by contrast, are registered investment vehicles.
  • What registration means is that an investment vehicle, like a mutual fund, is registered with the SEC/FSA, etc… and is compelled by law to disclose monthly performance and portfolios.  That is not the case with collective trusts.
  • While unregistered, collective trusts are not unregulated.  In the U.S., collective trusts are supervised by the Office of the Comptroller of the Currency (OCC).

(Sources: Alta Trust, Morningstar)