Wilmington Trust announced that it will offer collective investment trusts (CITs) on Nasdaq Fund Network, marking the first time that investors can access information on these low-cost investment vehicles via a standardized ticker.
Rob Barnett, Head of Retirement Distribution at Wilmington Trust, said Wilmington plans to roll out more than 200 searchable tickers through Nasdaq Fund Network (NFN). The tickers will be six letters long to distinguish them from mutual funds, which generally have five-letter tickers.
"We believe that this really puts CITs on a level playing field with similar vehicles, such as mutual funds or ETFs, in terms of participants, advisors and plan sponsors being able to get access to information," Barnett said. "We're hoping this sets a benchmark for everybody, so more firms and CITs adopt the use of Nasdaq Fund Network."
A CIT is a tax-exempt, pooled investment vehicle maintained by a bank or trust company and only available to qualified retirement plans, including 401(k) plans and specific government plans. CITs generally have lower legal, marketing, board and compliance-related costs.
"Because CITs are only available to qualified retirement plans; they offer cost savings to retirement plans, typically, it can vary between 5% and 20% depending upon the size of the plan," Barnett said. "These tend to be a more efficient vehicle from a cost perspective and a performance perspective; we're excited to see where CITs are going and how we're helping them move along."
CITs, which have been around since the 1930s, were the prevalent vehicle until the early 1980s when assets began to move away from CITs and into mutual funds. While similar in structure, mutual funds are valued daily, whereas CITs are typically valued monthly or quarterly.
Historically, plan participants had to request CIT data through an asset manager with investments in CITs. But in the mid- to late-2000s, fee disclosure regulations prompted greater transparency, according to Barnett.
"This move helped people understand the fees that are associated with their investments and their record keeping. Given that the investment trusts tend to be less expensive for people, this was a big deal," Barnett said.
Institutional investors were the primary stakeholders in CITs. Now, however, as CIT transparency has improved, that investor base has seen a major shift. Wilmington Trust has been able to further expand that investor base by collaborating with Nasdaq Fund Network, which further improves CIT transparency, solving a key obstacle to CIT adoption, while reaching over 70 million retail and institutional investors worldwide.
"Nasdaq Fund Network will help us continue our efforts to bring transparency around the vehicle and provide better access to information for advisors, plan sponsors and participants in the trust, so that they can make informed decisions about where to invest their money," Barnett said.
On NFN, which is accessible by more than 100 million people globally, products are updated with daily performance, NAV, valuation, and strategy level reference data and are given a ticker symbol to ensure easier searchability by investors, whether it be on Nasdaq.com, Yahoo, Bloomberg, CNBC or other searchable platforms.
NFN provides daily data for financial instruments, including mutual funds, money market funds, unit investment trusts (UITs), annuities, Separately Managed Accounts/Unified Managed Accounts, CITs, alternative investments, and structured products that are registered with Nasdaq.
“Our collaboration with Wilmington Trust to register CITs on Nasdaq Fund Network is a significant advancement in our mission to provide a much fuller and robust view of the financial markets,” said Lauren Dillard, Head of Nasdaq’s Global Information Services.
Wilmington will continue to work with advisors to enhance their understanding of CITs and help them determine when they might want to consider recommending a collective investment trust to their clients. The firm will also be selective about who they collaborate with going forward and are in a number of conversations right now, but emphasized its focus on having a deep relationship with their existing partners as opposed to simply having a larger quantity of partners.
"We're excited to collaborate with the Nasdaq Fund Network; it's a first-class organization, first-class brand, first-class people who know everything we sell," said Barnett. "We're excited to see how this initiative will help expand the transparency of collective investment trust information and where that will lead to in the future."
To learn more about Nasdaq Fund Network, click here.
Wilmington Trust N.A. Collective Investment Funds are trust company-sponsored collective portfolios; they are not mutual funds. Wilmington Trust, N.A. serves as the Trustee of the Wilmington Trust Collective Investment Trust and maintains ultimate fiduciary authority over the management of, and investments made in, the WTNA Funds. The WTNA Funds and units therein are exempt from registration under the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended. Investments in the WTNA Funds are not deposits or obligations of or guaranteed by Wilmington Trust, and are not insured by the FDIC, the Federal Reserve, or any other governmental agency. The WTNA 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 WTNA Funds. Participation in Collective Investment Trust Funds is limited primarily to qualified defined contribution plans and certain state or local government plans and is not available to Keogh plans, IRAs and health and welfare plans. Collective Investment Trust Funds may be suitable investments for participants seeking to construct a well-diversified retirement savings program. Investors should consider the investment objectives, risks, charges and expenses of any pooled investment company 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.wilmingtontrust.com/PrincipalRiskDefinitions or ask for a copy by contacting Wilmington Trust, N.A. at (866)427-6885.
Wilmington Trust is a registered service mark. Wilmington Trust Corporation is a wholly owned subsidiary of M&T Bank Corporation. Wilmington Trust Company, operating in Delaware only, Wilmington Trust, N.A., M&T Bank, and certain other affiliates, provide various fiduciary and non-fiduciary services, including trustee, custodial, agency, investment management, and other services. International corporate and institutional services are offered through Wilmington Trust Corporation’s international affiliates. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank, member FDIC.