Collective investment trusts have grown at a dramatic pace over the past two to three years, and may soon surpass retail mutual funds as the primary investment vehicles for pension schemes.
Boston, MA, June 16, 2008 – A new report from Aite Group, LLC analyzes the key drivers increasing the use of collective investment trusts (CITs - sometimes referred to as commingled funds by institutional investors and pension plans). The report also identifies software system vendors able to effectively support the specific accounting criteria required by collective investment trusts.
The collective investment trust market within the United States has developed rapidly within the past five years, as institutional investors have sought customizable and lower cost alternatives to retail mutual funds, and particularly after the 2006 passage of the Pension Protection Act. In the last year it has not been only the larger, billion-dollar-plus plans that have turned to collective investment trusts, but also the smaller, sub-US$100 million plans, seeking to cater to smaller pension plans largely ignored by larger plans. These smaller pension plans are being drawn to the economical and customizable solutions offered by collective investment trusts.
"The collective investment trust's attractiveness is driven by two key factors: low cost, and ease of use," says Phillip Silitschanu, senior analyst with Aite Group and author of this report. "The primary driver for the inherently low cost for collective investment trust is the less rigorous regulatory burdens placed upon the investment managers and trustee. In order to attain the lowest possible cost, however, all parties involved need to seek out the trustee offering the lowest servicing cost."
This 36-page Impact Report contains eight figures and three tables, and profiles six accounting system vendors that could be used by collective investment trusts, including: Advent, IGEFI, Milestone Systems, Pendo Systems, Princeton Financial Systems, and Thomson Reuters. Clients of Aite Group's Wealth Management service can download the report.