Why CITs

Collective Investment Trust Funds vs. Mutual Funds

Collective Investment Trusts (CITs) can often be less costly to launch and operate than Mutual Funds. And from an investor’s point of view, they also offer great fee transparency and are subject to regulatory oversight.

Qualified plans only

Declaration of trust

OCC regulated

Held to ERISA fiduciary standard

Data provided by manager

Institutional pricing

Pooled vehicle

Daily valued

NSCC traded

Fact sheets available

Professionally managed

Daily liquidity

All investors

Prospectus

SEC regulated

No ERISA fiduciary standards

Data publicly available

Institutional & retail pricing

CIT

Qualified plans only
Declaration of trust
OCC regulated
Held to ERISA fiduciary standard
Data provided by manager
Institutional pricing

Pooled vehicle
Daily valued
NSCC traded
Fact sheets available
Professionally managed
Daily liquidity

mutual

All investors
Prospectus
SEC regulated
No ERISA fiduciary standards
Data publicly available
Institutional & retail pricing

A side-by- side comparison: CIT vs. Mutual Fund

Collective investment trusts (CITs) and Mutual funds share many important characteristics in common. We think the differences drive real value and demonstrate why CITs continue to grow in popularity.

CIT

No
Yes
Typically no
Yes
Yes
Yes
Yes
Yes
More flexible
No

Middle

Initial deposit minimums
Available to IRC 401(a) qualified retirement plans
Distribution of dividends
Trust, audit, and custody included
Participant materials available
Daily valued with daily liquidity
NSCC tradable
Transparent, institutional fee structure
Recordkeeper pass‐through arrangements
Redemption or CDSC fees

Mutual Fund

May Apply
Yes
Exposure to retail flows
Yes
Yes
Yes
Yes
Yes
Less flexibility in pass‐through costs / fee structure
Redemption and/or CDSC fees may apply

Characteristics in Common:

Available to IRC 401(a) qualified retirement plans	Yes
Trust, audit, and custody included	Yes
Participant materials available	Yes
Daily valued with daily liquidity	Yes
NSCC tradable	Yes
Transparent, institutional fee structure	Yes

Differenciators:

Initial deposit minimums:

CITs	No
Mutual Fund	May apply

Distribution of dividends:

CITs	Typically no
Mutual Fund	Exposure to retail flows

Recordkeeper pass-through arrangements:

CITs	More flexible
Mutual Fund	Less flexibility in pass-through costs / fee structure

What kind of entities or plans may use a CIT?

CITs can be the right fit, but IRS regulations limit the kind of plans and entities that may take advantage of them.
Here’s an at-a-glance look:

Eligible

401(k) plan

Qualified profit‐sharing and stock bonus plans

Defined Benefit plans

457(b) government plans

Some separate accounts and insurance company contracts

403(b)(9) church plans

Not Eligible

Deferred compensation plans

Executive compensation plans

Endowments

457(f) government plans

Foundations

Other 403(b) plans

IRAs

Featured CITs

Jensen Quality Growth Collective Investment Fund

The Jensen Quality Growth Strategy is built on a commitment to investing in quality businesses that can weather all economic climates. It aims to provide attractive returns while mitigating downside risk. The In partnership with HB&T, Jensen offers qualified institutional investors the Jensen flagship Quality Growth Strategy with the lower shareholder servicing costs associated with a CIF.

Of the fewer than 250 companies that have met the initial threshold for inclusion in the Jensen Quality Universe, approximately 25 to 30 companies make the final cut for participation in the Jensen Quality Growth Fund. Jensen believes these quality businesses to be successful, well-managed companies that are attractively valued and positioned for long-term leadership in their industries.

Jensen Philosophy

A consistent, sustainable investment process is vital to weathering all economic climates. The strength of the Jensen investment philosophy is based on an unwavering commitment to investing in quality businesses. Jensen believes these quality companies possess sustainable competitive advantages, creating value as profitable businesses that can, over time, provide attractive returns with less risk than the overall market.

The Jensen Quality Growth CIF launched on February 1, 2019, and is accessible to eligible retirement plans through most recordkeeping platforms. Learn more here

SMART Funds® Today R2

SMART Funds®
A Unique Target Date Fund (TDF) Index Aimed at Fiduciaries

SMART Funds® is the first and only index focused on TDF prudence and performance expectations. It’s the ideal solution for fiduciaries who want to make prudent decisions. SMART Funds® delivers:

Low fees
Broad diversification at long dates away from the target date
Rigorous risk controls near the target date
A 2020 Top Performer with a continuous record of proven success going back to 1998

The SMART Design

SMART Funds® follows the patented Safe Landing Glide Path® (patent 8352349) that seeks to preserve the purchasing power of accumulated assets at the target date and asset growth during accumulation.

The SMART Funds® Index is investable as a collective investment fund for eligible qualified retirement plans through the NSCC Fund/SERV. It’s a proven performer with a live track record beginning in 2014 with back-testing to 1998. Learn more (link to fact sheets).