CIT Adoption Ticks Up as Providers Focus on Transparency, Growth
Collective investment trusts have become a dominant force in defined contribution plan investing, driven by factors that industry experts say have expanded beyond cost savings to include greater flexibility and the vehicles’ growing role within broader retirement plan offerings.
“They’ve become much more accessible, much more technologically friendly [and] much more accepted in the broader context,” says John Randall, senior director of operations and distribution at Investment Company Institute.
Once viewed primarily as a lower-cost alternative to mutual funds, collective investment trusts have become a DC plan staple. PLANADVISER’s most recent Defined Contribution Investment Only survey found that CITs accounted for 30.4% of DCIO assets in 2025, up from 28.7% in 2024. Assets in mutual funds, meanwhile, dropped to 38.7% of DCIO assets last year, down from 43.4% in 2024.
Additionally, Cerulli reported CITs officially surpassed mutual funds in 2024 as the most widely used investment vehicle within 401(k) accounts.
As adoption continues, providers, advisers and industry groups hope CITs may play a role in bringing more sophisticated investment strategies to retirement plans.
Expanding CITs’ Appeal
CITs became the preferred vehicle for DC plan investments due to their flexibility and ability to deliver institutional-quality investments at attractive price points. Kelly Campbell, multi-asset solutions lead at Capital Group, identifies flexibility as the most significant reason for their growth.
“The vehicle structure allows fee variability by assets invested—in other words, lower fees for higher asset levels,” Campbell says. “That’s a characteristic that has long existed in institutional separate accounts for the largest plans, but it’s something that mutual funds typically cannot offer, because they have a levelized investment management fee, typically across share classes. So I think the fact that the CIT can kind of bridge that gap and offer more fee flexibility in a pulled structure is a core reason for its popularity.”
Cost can also be a decisive factor for sponsors considering the investment vehicle.
“One of the primary benefits is lower cost, and that’s always on everybody’s mind from a fiduciary perspective,” says Cameron Cooke, executive vice president of investment consulting at Hub International Ltd. “Even if you have a long, drawn-out conversation about these vehicles with clients, typically what happens is that the cost consideration begins to outweigh a lot of some of the more operational or safety considerations of the vehicle.”
According to Cooke, as lower costs and greater flexibility continue to drive interest in CITs, advisers may also need to help sponsors understand how growing CIT adoption could affect the broader mutual fund market.
“What will happen naturally is: Market forces kind of exert themselves,” Cooke says. “Mutual funds may become more expensive as assets leave, because you just have a lower asset base. Sso naturally, you’ll see that gravitation either to the CIT on the retirement side or to ETFs on the wealth side.”
From a provider perspective, CITs have become more attractive not only because of their growing relevance in the DC market, but because firms can now outsource much of the infrastructure required to launch and maintain the products.
For example, London-based asset management firm Ninety One Ltd. launched its first suite of CITs in the U.S. in March.
“We looked at the market about 15 years ago, and at that point in time, given our size in the U.S. market, it was just too expensive for us to launch our own CITs,” says Sangeeth Sewnath, Ninety One’s head of the Americas and global head of the client group. “What’s changed is that … you can use partner [companies] to do the work that they’re good at, and you do the work you’re good at.”
‘Huge Area of Growth’
Cooke expects CIT adoption to continue growing, particularly within widely used DC plan products such as target-date funds and managed accounts.
“I feel like [TDFs are] a huge area of growth,” Cooke says. “Then I think adviser-managed accounts, where you’re constructing these more custom CITs, maybe containing private market solutions—like private credit, private equity, that are not included in the core menu—is another area of growth for the CITs.”
Sara Shean, head of institutional DC at PGIM, a subsidiary of Prudential Financial Inc., pointed to similar potential growth within CITs for DC plans, especially considering PGIM’s launch of its first private credit CIT for DC plans in May.
“Historically, the defined benefit market has made substantial allocations to private market investments, and over time, we anticipate that the [DC] market will become more closely aligned and that CIT vehicles will be an important component of that growth,” Shean wrote in an email to PLANADVISER.
PGIM had $52 billion in assets across more than 55 CITs on its platform as of March 31.
Another important factor that could affect CIT growth is the competition with mutual funds. While it may seem like mutual funds and CITs are competing head-to-head for control of DCIO assets, Randall says he sees CIT adoption continuing alongside mutual funds.
“I don’t think it’s an ‘either, or’—it’s an ‘and,’” Randall says. “I’m sure there are plans and situations and investment strategies which can be delivered [with both mutual funds and CITs]. Maybe one’s better than another from the investment manager’s standpoint. … I think they both have a place in the marketplace.”