Answers

What is the typical cost savings of a CIT vs. a Mutual Fund?

Most experts agree that the cost savings is in the 10 to 30 basis point range. Startup cost is also significantly lower due to inherent efficiencies of the CIT structure in the areas of legal, compliance, and marketing.

I currently manage model portfolios on 401k recordkeeping systems. Can I integrate CITs into my retirement plan practice?

Yes, Hand works with retirement plan advisors to help scale their business by providing services for customized risk-based, target date, and white-labeled funds.

Where do you see the greatest market opportunity for CITs?

According to Cerulli*, 88% of plans with $1B+ in assets use CITs or separate accounts. The challenge and the opportunity is to make CITs available and cost-effective for smaller and mid-tier plans. This tracks with our growth and sense of market demand.

*The Cerulli Report: U.S. Defined Contribution Distribution 2017: Re-Evaluating the Use of CITs in DC Plans.

Can CITs have multiple share classes? Can they pay revenue sharing similar to mutual funds?

Yes, one big advantage of a CIT is its fee flexibility. Multiple share classes can be created to accommodate customized management fees or revenue sharing arrangements.