The Power of Collective Investment Trusts in Retirement Plans

In today’s increasingly complex retirement plan environment, financial professionals are seeking investment options that deliver value, efficiency and fiduciary alignment. At Ameritas, we understand the critical role you play in guiding plan sponsors toward strategies that support participant outcomes and plan success.

To better support your efforts, Ameritas has enhanced its EliteAdvantage program by integrating Collective Investment Trusts. CITs are pooled investment vehicles designed exclusively for qualified retirement plans that typically offer institutional pricing, simplified compliance, and access to professionally managed, diversified portfolios.

This enhancement reflects our commitment to equipping financial professionals with innovative tools that help build stronger, more cost-effective retirement options for your clients.

A growing opportunity

According to independent investment research firm Morningstar, CITs have been gaining traction as a target-date investment vehicle, particularly in recent years. As target-date assets increased to about $3.8 trillion overall as of June 2024, CITs passed mutual funds with about $1.9 trillion, or 50.5%, of target-date assets. Meanwhile, mutual funds maintained about 49.5% of the target-date marketing share, down from 71% in 2015.

Why have CITs become so popular?

Flexibility and streamlined costs

Collective Investment Trusts pool money from investors to buy a variety of investments. CITs also offer a mix of active and passive strategies designed for investors who want to plan for a specific retirement date.

According to Brett Eisberg, director, product management, retirement plans at Ameritas, a critical benefit of CITs is that they enable stable value funds to be part of the overall mix of products in a portfolio, putting the stability of these funds to work to lower risk—and, in turn, costs.

“The inclusion of stable value investments has a beneficial impact to the overall expense and volatility profile of the funds,” he says. “Combine that savings with the lower administrative costs CITs generally offer, it helps make this vehicle an extremely attractive tool for investors.”

Adding CITs to the fund mix at Ameritas is particularly relevant given the growing popularity of stable value funds. According to the Stable Value Investment Association, nearly $853 billion is currently invested in stable value funds across all plan types (individually managed accounts, pooled funds, insurance general accounts and separate accounts), and approximately 75% of defined contribution plans offer a stable value fund option.

Customized retirement investment portfolios

Another key advantage of CITs is their ability to offer customized investment portfolios tailored to specific investor needs.

“Navigating retirement planning involves juggling a lot of risks,” Brett explains. “A target date fund series with a stable value option as an underlying investment can be a useful tool for managing these uncertainties.” Consider these four key risk areas where a target date fund series with this stable value option can make a difference:

Volatility risk: The stable value option within a target date fund (TDF) provides more consistent returns.

Market risk: TDFs aim to optimize growth potential in the early stages of an investor’s career and gradually adjust equity exposure to minimize the effects of market downturns as retirement approaches.

Longevity risk: With increasing life expectancy, TDFs are structured to follow a glide path that aims to ensure a steady income throughout retirement.

Behavioral risk: There is no need to manually adjust investment allocations, as a TDF is structured to automatically maintain an appropriate mix of assets based on the participant’s expected retirement date.

The inclusion of CITs is part of continuing efforts to provide a wide range of retirement wealth building opportunities at Ameritas. Recently, we expanded the options available in both our flagship personalized managed accounts retirement platforms to keep up with growing market demand.

A constant commitment to service

While every retirement plan opportunity is different, Ameritas remains committed to working with financial professionals to find the right option for your clients’ needs. Learn more about our retirement products and offerings.

Ameritas® is a marketing name for Ameritas Mutual Holding Company and its affiliated subsidiary companies, including Ameritas Life Insurance Corp. and Ameritas Life Insurance Corp. of New York. Securities and investment advisory services offered through affiliate Ameritas Investment Corp., member FINRA/SIPC.

Ameritas® does not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.

Sources and References:
Collective Investment Trusts: An Important Piece in the Retirement planning Puzzle
Stable Value at a Glance