New research describes the fundamental changes driving the growth of CITs
ALPS, a subsidiary of DST Systems, Inc. (NYSE: DST), providing products and services to the financial services industry, in collaboration with DST kasina, today released a research paper on the fundamental changes that are driving the growth of collective investment trusts (CIT). The research concludes that CITs could become the dominant investment vehicle in the defined contribution market.
CITs are already outpacing the overall retirement market, growing at a 7-year CAGR of 14.4 percent, compared to less than 9 percent for the overall retirement market over the same time period. CITs could reach $3.1 trillion in total retirement assets by the end of 2018, up from $1.9 trillion at the end of 2015.
Key Research Findings:
- CITs represent less than 14% of assets in all CIT-eligible plans in 2015, leaving ample headroom for the investment structure to grow in the years to come.
- Most plan sponsors, acting as fiduciaries, are effectively considering CITs one of the investment option sleeves for their 401(k) plans as CITs have a structural cost advantage over mutual funds, costing less from both a compliance and marketing standpoint.
- Relative cost savings of CITs over institutional and R6 class mutual funds were estimated to be in the 10 to 30 basis point range.
"ALPS' comprehensive CIT servicing solution seeks to deliver an efficient way for Investment Managers to launch and manage assets in a CIT structure," said Lisa Mougin, Senior Vice President and Director of Sales and Client Relationship Management at ALPS. "We believe the continued regulatory focus on fees and fiduciary oversight positions CITs for continued growth, particularly in the defined contribution space."
Through its subsidiary companies, ALPS Holdings, Inc. is a leading provider of innovative investment products and customized servicing solutions to the financial services industry. Founded in 1985, Denver-based ALPS delivers its Asset Gathering and Asset Servicing Solutions through offices in Boston, Miami, New York, San Francisco, Seattle, Toronto. ALPS is a wholly-owned subsidiary of Kansas City-based DST Systems, Inc.
DST kasina, LLC, helps leading companies in the financial services industry manage data, gain insight, and ignite change in their business. Through effective use of advanced analytics, research, and distribution intelligence technologies, DST kasina enables businesses to better understand, predict, and optimize key business factors impacting their asset growth and profitability.