Assets in collective investment trusts saw a double-digit increase in 2016, rising to $2.8 trillion at the end of 2016—an 11.8 percent increase year over year from 2015.
That's according to Cerulli research, which also finds that increased interest from institutional investors is driving the rise—thanks in part to the lower fees charged by CITs. And the interest is pushing asset managers to boost CIT offerings.
According to the report, the leading priority among managers' product-related initiatives is building out new vehicle offerings. And for managers that don't currently offer CITs, 86 percent are currently considering offering them, with the remaining 14 percent indicating they have formal plans to build them during the next 12 months.
Recommended For You
"Many managers are revisiting their product offerings and considering how CITs could play a role in their business based on the increasing demand for lower-cost vehicles among institutions," Christopher Mason, senior analyst at Cerulli, says in the report. He adds, "This has caused many firms to explore the possibility of launching CITs to help meet this demand and remain competitive in the marketplace."
Mason is quoted saying that "[i]nstitutional investors are gradually looking to commingled vehicles, such as CITs, because of their heightened sensitivity about fees paid to investment managers. Because CITs can often be priced lower than mutual funds, they serve as an attractive option for those institutions that are permitted to invest in them."
In fact, Mason points out that "Nearly 95 percent of plan sponsors value the cost savings compared to mutual funds as one of the most important attributes of CITs. Similarly, roughly 90 percent of consultants feel that the cost savings compared to mutual funds is a very important attribute of CITs."
Cerulli's 2017 Collective Investment Trust Survey, in partnership with the Coalition for Collective Investment Trusts, finds that approximately 81 percent of respondents indicate that consultants are very knowledgeable about CITs, while only 14 percent say the same about financial advisors.
And target-date strategies make up approximately 19.4 percent of total CIT assets held in defined contribution plans. The majority of managers (43 percent) anticipate adding portfolio specialists/client portfolio managers to their institutional sales teams during the next 12 months
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
