Collective investment trusts have been around for decades, but for many plan sponsors, they still seem mysterious—or at least more complicated than they need to be. That’s unfortunate, because when used appropriately, CITs can be a powerful tool for improving participant outcomes without increasing fiduciary risk.
That’s according to a recent article from CAPTRUST, a national investment advisory firm, which offered a clear-eyed look at what CITs are, why sponsors use them, and what’s changed in 2026.
The basics: A CIT is a pooled investment vehicle maintained by a bank or trust company. Unlike mutual funds, CITs aren’t registered with the SEC under the Investment Company Act of 1940—they’re regulated by banking authorities and available only to qualified retirement plans. From a participant’s perspective, a CIT often looks and behaves like a mutual fund, with a stated objective, professional management, daily valuation, and performance reporting. The key differences happen behind the scenes.
The most common reason sponsors consider CITs is cost. Because CITs don’t carry the same regulatory, marketing, and distribution expenses as mutual funds, they can often be offered at lower expense ratios. But cost alone shouldn’t drive the decision. Well-structured CITs can also offer greater fee transparency, customization options (including white-label or custom target-date strategies), and institutional pricing tiers that reward asset growth over time. None of these benefits is automatic, though—a poorly structured CIT is no better than a poorly chosen mutual fund.
The trade-offs matter, too. Because CITs aren’t SEC-registered, they don’t produce a prospectus. Instead, sponsors and participants rely on a declaration of trust and fact sheets, which places more responsibility on committees to ensure disclosures are clear and participant-friendly. Liquidity can also differ—most CITs are daily-valued and daily-liquid, but not all. And CITs are generally not portable outside of qualified plans, which is something sponsors should understand before defaulting participants into something they may not be able to take with them down the line.
What’s different about CITs in 2026? Customization is becoming mainstream. Custom target-date CITs, once limited to mega-plans, are increasingly accessible to mid-sized sponsors—which raises the fiduciary bar. Regulatory scrutiny hasn’t gone away; committees should expect continued focus on fee reasonableness, benchmarking, and documentation. Participant communication matters more than ever as menus incorporate more white-label and collective options. And innovation is creeping in, with some CIT structures being used to explore new asset classes or lifetime income components.
The bottom line from CAPTRUST author Michael Webb: CITs are not a silver bullet. They’re a tool that can be used well or poorly. The fiduciary standard doesn’t ask whether an investment vehicle is popular or innovative—it asks whether it’s prudent, well-documented, and in the best interest of participants. For sponsors considering CITs—or already using them—that means slowing down, asking better questions, and resisting the urge to adopt complexity for its own sake.
