Collective investment trusts, the investment vehicles commonly known as CITs, are no longer the best kept secret in the multi-trillion-dollar U.S. retirement market. In fact, as of 2017, more than one-quarter of the $5.5-trillion in 401(k) assets in this country was invested in CITs, according to research firm Cerulli Associates[1].

What are CITs?

CITs are pooled, tax-exempt investment vehicles sponsored and maintained by a bank or trust company that also serves as the trustee.  CITs combine assets from eligible investors into a single investment portfolio with a specific investment strategy. Eligible investors generally include defined contribution (DC) 401(k) and defined benefit (DB) pension plans and certain state and local government plans. By pooling assets, sponsors of CITs benefit from the economies of scale to offer lower overall expenses.

Importantly, the sponsoring trustee is committed to acting in the best interest of the Fund and its participants, operating under the Employee Retirement Income Security Act of 1974 (ERISA).

A brief history of CITs

The first collective investment trust launched in 1927, but CITs did not become widely used until the 1950s when Congress allowed banks to combine assets from stock bonus plans, pensions and corporate profit-sharing plans[2].

CITs reached an important milestone in 2000, when the National Securities Clearing Corporation (NSCC) added them to its mutual fund trading platform, enabling them to be widely traded. Then in 2006, the Pension Protection Act was signed into law, which compelled plan sponsors to invest unallocated 401(k) assets into qualified default

investment alternatives (QDIAs), mainly composed of target date funds (TDFs). The structure of CITs is well suited to TDFs, so both experienced a rapid emergence.

In the late 2000s and into this decade, an aggressive push made by the U.S. Congress and the Department of Labor (DOL) for greater disclosure of the fees charged by service providers to 401(k) plan sponsors and participants helped highlight the inherently lower fee structure of many CITs. This shifted even more assets into these vehicles.

According to a 2018 Cerulli Report, CITs grew by more than 8%, on average, year over year for the previous five years[3]. This increased popularity was due in part to the fact CITs offer more innovative investment opportunities and customizable investment options than ever before. However, the need for greater awareness and education about the unique benefits of CITs remains underscored by the fact that traditional mutual funds and ETFs continue to be more frequently used by advisors and plan sponsor clients.

Making a difference for today’s strategic advisors

Advisors looking to strengthen relationships with plan sponsor clients can benefit by leveraging investment products that offer the scalability and flexibility to empower them to become stronger strategic partners.

In general, the advantages of CITs can help advisors achieve these objectives in five critical ways:

  1. Transparency: Long gone are the days when CITs were valued quarterly and traded infrequently. Today, the vast majority of them are both valued and traded daily; and, thus, performance calculations are widely available via Morningstar and other platforms. As of TKTKTK, a CIT fund will have a Nasdaq ticker symbol for the first time, allowing for even greater transparency. All CIT stakeholders have a voice when it comes to ensuring even more transparency that empowers advisors, plan sponsors and participants to make fully informed decisions.
  2. Customization: CITs can be tailored to fit the unique investment goals and risk appetite of a specific plan sponsor. A trustee can build a bespoke mix of active and passive investments, for example.
  3. Fees: In many cases, CIT fees are lower than those of mutual funds and ETFs. CITs do not have retail share classes, boards of directors to support, or SEC reporting requirements, allowing them to generally have a lower cost structure than other vehicles. Moreover, a plan sponsor may have a separate share class created for them–given a sufficient level of assets–resulting in even lower fees. In most cases, a bank or trust company can approve a new share class in a matter of weeks versus the many months it can require for a mutual fund to create a new share class.
  4. Regulation: CITs are bank-administered trusts regulated by the Office of the Comptroller of the Currency (OCC) as well as by the Internal Revenue Service and the DOL. Fund sponsors (banks and trust companies) are held to ERISA fiduciary standards with respect to ERISA plan assets invested in CITs.
  5. Operations: For advisors, plan sponsors, and participants, onboarding can be more complex when it comes to CITs relative to mutual funds and ETFs. That’s why leading banks and trust companies have operational capabilities to support advisors throughout the process and continually work to improve onboarding efficiency. Initial legal documentation can be truncated to as little as four pages and user guides help advisors and plans sponsors quickly understand all pertinent information about the paperwork needed to begin investing in a CIT.

What’s next for CITs?

In recent years, inflows into CITs have been growing steadily with more advisors becoming aware of the important roles these vehicles serve in the expanding retirement marketplace for scalable, flexible, relatively low-cost solutions. Advisors considering optimal strategies for their clients and evaluating the best options for executing those strategies are looking more often at CITs. They view them not just as solutions for helping clients meet their long-term goals, but also for differentiating themselves in a crowded financial services industry.

Continuing this trend, we are likely to see CITs used more in small plans and mega plans alike.

There is also a meaningful opportunity to digitize the onboarding process for CITs–an area that we at Wilmington Trust are beginning to pioneer. Participation materials and other information is being coded into apps so that advisors, plan sponsors, and participants can more easily engage with the process anytime, anywhere via their mobile devices. These tools will also enable advisors to more efficiently communicate with plan sponsors about investments and other critical touchpoints.



Wilmington Trust, N.A. Collective Investment Funds (“CIT Funds or “the Funds”) are bank collective investment funds; they are not mutual funds. The Funds and units therein are exempt from registration under the Securities Act of 1933, as amended, and the Investment Company Act of 1940 as amended. Participation in the Funds is limited primarily to ERISA-qualified defined contribution plans and certain state or local government plans. Wilmington Trust, N.A. serves as the Trustee of the Wilmington Trust Collective Investment Trust and maintains ultimate fiduciary authority over the management of, and investments made in, the portfolio. Investors should consider the investment policy, objectives, risks, charges and expenses of any pooled investment company carefully before investing. The Funds are not available to Keogh plans, IRAs and health and welfare plans. The Additional Fund Information and Principal Risk Definitions contains this and other information about a Collective Investment Trust Fund and is available at This document should be read carefully before investing.  Ask for a copy by contacting Wilmington Trust, N.A. at (866)427-6885 or

Investments in the Funds are not insured by the FDIC or any other government agency, are not deposits of or other obligations of or guaranteed by Wilmington Trust, or any other bank or governmental agency, and are subject to risks, including possible loss of the principal amount invested.

The information in this material has been obtained from sources believed to be reliable, but its accuracy and completeness are not guaranteed. Opinions, estimates and projections constitute the judgment of Wilmington Trust and are subject to change without notice. This material is for educational purposes only and is not intended as an offer, recommendation or solicitation for the sale of any financial product or service or as a determination that any investment strategy is suitable for a specific investor. There is no assurance that any investment strategy will be successful. Diversification does not ensure a profit or guarantee against a loss. Past performance is no guarantee of future results.

Wilmington Trust is a registered service mark, used in connection with various fiduciary and non-fiduciary services, including trustee, custodial, agency, investment management, and other services, offered to trust, individual, and institutional clients by certain subsidiaries and affiliates of Wilmington Trust Corporation. Such subsidiaries and affiliates include, but are not limited to, Manufacturers & Traders Trust Company (M&T Bank), Wilmington Trust Company (operating in Delaware only), Wilmington Trust, N.A., Wilmington Trust Investment Advisors, Inc., Wilmington Funds Management Corporation, and Wilmington Trust Investment Management, LLC. Wilmington Trust Corporation is a wholly owned subsidiary of M&T Bank Corporation. International corporate and institutional services are offered through Wilmington Trust Corporation’s international affiliates. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank, member FDIC.

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