As of January 2025, collective investment trusts (CITs) hold $2.02 trillion in target date fund assets—overtaking mutual funds at $1.95 trillion.¹ This milestone reflects a clear shift among retirement plan advisors, consultants, and plan fiduciaries toward CITs’ combination of cost efficiency, flexibility and institutional-grade governance without sacrificing robust investor protections. Here are three key reasons behind this shift:
Research by the Department of Labor indicates that a 1% fee increase can erode more than $280,000 in participant savings over a 35-year career.² CIT-based TDFs beat mutual funds on cost 88% of the time and accounted for 93% of new TDF launches in 2024.¹
Beyond fee savings, CITs are unlocking access to alternative growth sources previously reserved for pensions and endowments. BlackRock estimates that thoughtfully integrating private markets into TDFs could boost 401(k) savings by around 15 percent over 40 years.³
The firm further projects that a structured private-asset allocation can deliver an incremental 50 basis points of return each year over a fund’s lifecycle.³ Embedding these exposures within a CIT framework empowers plan sponsors to move the discussion from “cheapest” to “most robust,” offering participants diversified, long-term opportunities once gated by accredited-investor rules.
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Purpose-built for defined-contribution plans, CITs deliver lower operating costs, transparent governance under ERISA, and operational efficiencies that support ongoing innovation.
CITs are strictly regulated under state or federal banking laws, trust law, and, importantly, the U.S. Employee Retirement Income Security Act of 1974 (“ERISA”). Under ERISA, the CIT trustee and other investment managers are subject to the law’s full array of fiduciary duties, described by appellate courts as “the highest known to the law.” They are also required to comply with ERISA’s strict “prohibited transaction” rules designed to address potential conflicts of interest.
Great Gray is at the forefront of democratizing investor access to private assets through retirement plans. The recently launched Panorix Target Date Series, developed by Great Gray with key service providers, BlackRock Financial Management, Inc. and Wilshire Advisors LLC, is a landmark example of this innovation. Access to private assets have traditionally been gated behind accredited investor rules and multi-million dollar minimums. Retirement plans are the most logical gateway for the investing public to access private assets, as the average American’s most significant investment exposure is through their 401(k) per the Federal Reserve’s latest Survey of Consumer Finances.
For years, the conversation around TDFs was dominated by fee compression. The next frontier is about helping to empower better outcomes paired with robust investor protections and best-in-class innovation.
CITs in Target Date Funds are more than just a cost-saving tool—they represent a strategic upgrade for defined-contribution lineups. If you haven’t begun discussing CIT TDFs with your plan sponsors, you’re behind the curve and may be doing your clients a disservice. CIT TDFs deliver lower fees, broader asset-class access, and enhanced diversification.
Ready to discuss how CIT TDFs can elevate your retirement plan offerings? Contact your region’s Qualified Plan Specialist today.
¹ Sway Research’s State of the Target-Date Market: 2025
² U.S. Department of Labor, “Participant Fee Disclosure”
³ BlackRock, “Private Markets in Target Date Funds,” June 26, 2025
comparisons between CITs and Mutual Funds. CITs are tax-qualified investments primarily restricted to the retirement market so investors tend to have a longer-term horizon and the trustee can make investment decisions without tax considerations. Mutual funds are not subject to these investor limits or investment horizons, and must distribute substantially all of their taxable net gains and income to investors. CIT expense structures can be customized to investor channels. Mutual funds generally have less fee flexibility. CITs tend to have lower administrative, marketing and distribution costs than mutual funds due to the differences in how they can be sold and to whom. CITs are maintained by a bank as trustee and are subject to federal or state banking regulation and ERISA fiduciary standards. Mutual funds are managed by registered investment advisers and are subject to extensive SEC regulation and public disclosure and reporting requirements. Both CITs and mutual funds are generally priced and traded daily, subject to annual financial audits, and benefit from their pooled structure that aggregates investor funds and can provide greater diversification than individual accounts such as separately managed accounts (SMAs).
Great Gray Trust Company, LLC Collective Investment Funds (“Great Gray Funds”) are bank collective investment funds; they are not mutual funds. Great Gray Trust Company, LLC serves as the Trustee of the Great Gray Funds and maintains ultimate fiduciary authority over the management of, and investments made in, the Great Gray Funds. Great Gray Funds and their units are exempt from registration under the Investment Company Act of 1940 and the Securities Act of 1933, respectively.
Investments in the Great Gray Funds are not bank deposits or obligations of and are not insured or guaranteed by Great Gray Trust Company, LLC, any bank, the FDIC, the Federal Reserve, or any other governmental agency. The Great Gray Funds are commingled investment vehicles, and as such, the values of the underlying investments will rise and fall according to market activity; it is possible to lose money by investing in the Great Gray Funds.
Participation in Collective Investment Trust Funds is limited primarily to qualified retirement plans and certain state or local government plans and is not available to IRAs, health and welfare plans and, in certain cases, Keogh (H.R. 10) plans. Collective Investment Trust Funds may be suitable investments for plan fiduciaries seeking to construct a well-diversified retirement savings program. Investors should consider the investment objectives, risks, charges, and expenses of any pooled investment fund carefully before investing. The Additional Fund Information and Principal Risk Definitions (PRD) contains this and other information about a Collective Investment Trust Fund and is available at www.greatgray.com/cit-fund-info/principal-risk-definitions/ or ask for a free copy by contacting Great Gray Trust Company, LLC at (866) 427-6885.
Great Gray and Great Gray Trust Company are service marks used in connection with various fiduciary and non-fiduciary services offered by Great Gray Trust Company, LLC.