Collective trusts present growing opportunity

According to an SEI white paper released in May, collective investment trusts are presenting a significant business opportunity in the defined-contribution market. The paper cites Morningstar data that shows CIT assets grew by over 150 percent between 2005 and 2007 to a total of $500 billion. In 2006, 41 percent of defined-contribution plans featured CITs.

CITs are exempt from the 1940 Investment Company Act and SEC registration, and can invest in hedge funds, ETFs and mutual funds. By law, they must be maintained by a bank or trust company, so asset managers interested in using CITs must have trustee capabilities.