If you’ve come across the term collective investment trusts or CITs and wondered what they are, you’re not alone. While they’re not as commonly discussed as mutual funds, they play an important role in retirement plans like the New York State Deferred Compensation Plan (NYSDCP). Let's break down what CITs are, how they work and how they compare to other investment options.

What are CITs?

At their core, CITs are investment vehicles in which multiple investors pool their money to invest in a variety of assets, such as stocks or bonds. They are managed by an investment management company, which oversees the fund to ensure that it sticks to its investment strategy. While this might sound a lot like mutual funds, CITs have several features that make them unique.

Key features of CITs

CITs offer certain advantages for retirement Plan participants, but they're not structured in the same way as mutual funds. Here’s a closer look at what sets them apart: 

Regulatory oversight

While mutual funds are regulated by the Securities and Exchange Commission (SEC), CITs fall under the jurisdiction of either the Office of the Comptroller of the Currency (OCC), which regulates national banks, or by a comparable state regulator for state-chartered trust companies.

Flexibility in management

The investment management company operating the CIT has more leeway than a mutual fund manager in areas such as restricting withdrawals or redemptions, which is why they’re tailored specifically to retirement plans.

Limited access

Unlike mutual funds, CITs are exclusive to retirement plans like the one you’re a part of. You won’t find them available for retail investors (individuals investing outside of a plan).

No prospectus

CITs don’t require a prospectus like mutual funds do. Instead, you’ll find their information in fund fact sheets provided from the Plan. Although CITs have detailed plan and trust documents, they aren’t routinely made available to Plan participants.

No ticker symbols

Many are familiar with looking up mutual funds online by their ticker symbol. CITs don’t have one. This means performance information about a CIT will typically be available only through your Plan.

Potential for lower costs

One significant benefit of CITs lies in their cost structure. Without retail investors or regulatory obligations like SEC registration, CITs often have lower fees. These reduced expenses can potentially leave more of your money working for you.

CITs vs. mutual funds vs. custom funds 

To help clarify how CITs compare with other familiar investment options in your Plan, here’s a quick snapshot of their differences.

Feature CITs Mutual funds Custom funds
Availability Only for retirement plans Available to all investors Exclusive to your Plan
Regulation By OCC or state authorities By SEC Overseen by NYSDCP Board
Prospectus Not required Required Not required
Ticker symbol Not available Publicly available Not available

Why don’t you hear about CITs as often?

CITs aren’t as heavily advertised as mutual funds, simply because they serve a specific group of investors. They’re designed for workplace retirement plans, rather than the average retail investor. Think of them as a behind-the-scenes option, quietly working to offer value through lower fees and efficient management.

What does this mean for you?

As a participant in the Plan, you benefit from an investment option that’s built with retirement savings in mind. While CITs might lack the visibility and branding of mutual funds, they can be a smart, cost-effective choice for long-term goals.
Still have questions?
Feel free to contact an Account Executive. They’re here to guide you through your options and help you make informed decisions about your financial future.