CITs gaining ground in the 401(k) space

For about a 25-year run, mutual funds dominated the 401(k) market, but signs are changing. A recent Cerulli report indicates CITs (Collective Investment Trusts) are currently on pace to overtake mutual funds as the most popular target-date vehicle in 2024, as they now represent 49% of the 401(k) market.

It’s an incredible number and probably has to deal with lower investment fees and the ability to negotiate fees. I would imagine CITs are cheaper because of less marketing and overhead by CIT provides. They will get further ground in the retirement plan space when they are eventually permitted in the 403(b) space, which will eventually happen.

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