Mutual funds remain a massive source of assets, with nearly US$50 trillion in assets under management globally. Recent years, however, have seen the legacy vehicle beset by a number of competitors. Low-cost exposure and intraday liquidity have propelled the fortunes of the ETF in retail markets. Active and passive ETFs in the United States gathered a record US$1 trillion in net new flows in 2024. Collective investment trusts (CITs), meanwhile, have aggressively pursued opportunities within retirement channels that were historically built around, and provided greater protection for, mutual funds. Data from MarketPulse, powered by Simfund, an industry-leading view of institutional and retail financial data, found assets in CITs crossed US$6.1 trillion in September 2024.
CITs are pooled vehicles that are available to qualified retirement plans. They have grown in popularity thanks to their ability to help save on costs in what is already an extremely cost-focused market. CITs operate under banking regulation as opposed to SEC regulation like the Investment Company Act of 1940. This results in lower registration costs as well as the ability to offer customized fees, which has proven exceptionally beneficial to large retirement plans that can use their scale to negotiate more competitive fee schedules.
By: Alan Hess, Vice President, ISS Market Intelligence
