This white paper discusses investment vehicle selection in defined contribution (DC) plans, with a particular focus on the growing use of collective investment trusts (CITs). It highlights some of the important issues plan sponsors should consider when implementing a CIT.
The logistics of investing in CITs are different from those of investing in mutual funds or separate accounts. The plan sponsor must understand the investment characteristics, the role the strategy will play in the plan’s overall portfolio and the anticipated value a CIT provides after fees. The plan sponsor must also decide how best to implement the CIT for the plan.
What to Consider Before Implementing a CIT
- Logistical Differences: Understand how CITs differ from mutual funds.
- Portfolio Strategy: Determine the role the strategy plays in the overall portfolio.
- Fee Evaluation: Anticipate the value a CIT provides after fees.
- Implementation: Decide how best to implement the CIT for the plan.