Some Funds in Your 401(k) Aren’t Really Mutual Funds After All

via Wall Street Journal

Don’t look now, but the mutual funds in your 401(k) may not be mutual funds after all.

In recent years, more 401(k) plans have replaced the mutual funds in their investment lineups with collective investment trusts. These investments look and act a lot like mutual funds, but generally have lower fees and disclose less about their inner workings to 401(k) participants.

Also known as collective trust funds, such investments currently account for $2.4 trillion, or 16%, of the $15 trillion in 401(k)-style and pension plans, up from $1.3 trillion (and 12.7% of the total) in 2009, according to the Investment Company Institute and Cerulli Associates, a research firm that specializes in the asset-management industry. The trusts are accounts available only to retirement plans. They are sponsored by banks and trust companies and are primarily overseen by banking regulators, rather than subject to mutual-fund rules enforced by the Securities and Exchange Commission.


About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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