Wilmington Trust, a provider of international corporate and institutional services, investment management and private banking, is working to bring greater transparency to collective investment trusts (CITs) by helping provide information to market participants on a broader scale.
Wilmington Trust recently announced a partnership with global investment management firm AllianceBernstein (AB). Together, they will provide CITs for defined contribution clients, supported by administrative services. With no minimum requirements to invest, the two companies will create a seamless onboarding process to implement CITs for a broad range of clients and plan sponsors.
Robert Barnett, Group Vice President and Head of Retirement Distribution at Wilmington Trust, said the partnership brings together AllianceBernstein’s asset management capabilities with Wilmington’s back office and middle office capabilities. This makes an ideal team to bring CITs to the retirement-plan marketplace.
CITs have been around since the 1930s, according to Barnett. They are a tax-exempt, pooled investment vehicle maintained by a bank or trust company only available to qualified retirement plans, including 401(k) plans and certain government plans.
“[CITs] offer a lower-cost vehicle for the same strategy to retirement-plan investors, Barnett said. “It’s really the same investment, just at a lower expense due to certain scale requirements through the vehicle. So, they allow for an easier access point for retirement plans.”
CITs generally have lower legal, marketing, board and compliance-related costs, and as assets increase, fees may decrease, Wilmington noted in its announcement. They also mirror a mutual fund structure. CITs look similar to mutual funds because daily data is posted on the trustee’s website and fact sheets are included with the enrollment materials.
However, because CITs are only eligible to qualified retirement plans, information on them isn’t readily available. To remedy this situation, Wilmington is constantly exploring avenues that can provide greater transparency to CITs, such as Nasdaq Fund Network (NFN), which distributes product performance for more than 35,000 instruments across a variety of asset classes, countries and currencies.
On NFN, which is accessible by more than one million people globally, products are updated with real-time performance, NAV and valuation data and are given a ticker symbol to ensure searchability by investors, whether it be on Nasdaq.com, Yahoo, Bloomberg, CNBC or other financial platforms.
NFN currently has coverage of NextShares Exchange-Traded Managed Funds, mutual funds, money market funds, unit investment trusts, annuities, structured products and alternative investment products. NFN also recently started supporting new products, including managed accounts (SMAs and UMAs), CITs, hedge funds and demand deposit accounts.
“In the next month or so, our funds will have tickers. Participants will be able to go on Google, type in their ticker and pull down information on their funds, so it will be easier for them to access the information and make it more transparent for them,” said Barnett.