The “Collective Trust” – A New Financial Product?

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Much Like a Mutal Fund – But Less Transparent

By Staff Reporters

Recently, we received this query from a physician-investor. So, we went right to the innovator of this financial product for the answer.

A collective trust is similar to a mutual fund that only sells to institutional investors like 401-k and 403-b plans. Because a collective trust doesn’t take on retail investors, it’s exempt from some regulatory requirements, so beware!

But, not having to deal with retail investors also makes the costs lower.



The BlackRock EAFE Equity Index Collective Trust invests in stocks in developed countries, tracking the MSCI EAFE index.


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2 Responses

  1. My More on Collective Trusts

    Collective funds, or collective [investment] trust funds (CTFs), are not new. In fact, the first collective investment fund was offered in 1927, a year before the first mutual fund was marketed to the public.

    In 1955, the Federal Reserve authorized banks to pool funds from pension, profit-sharing, and stock bonus plans (the IRS subsequently ruled that such funds could be tax exempt). In fact, until the 1980s, collective trust funds were a common retirement plan investment vehicle. Then, the mutual fund marketing machine boomed.

    Today, about 45 percent of 401(k) plans include CTFs. You’re more likely to have collective trusts in your plan if you work for a company with more than 1,000 employees. About 70 percent of larger companies offer CTFs, according to Morningstar. And, the Department of Labor is rolling out new rules for retirement plan sponsors.


    Dr. David Edward Marcinko MBA CMP®
    [Founder and CEO]


  2. CTFs

    Mutual fund “alternative” strategies are a rapidly growing and evolving area of investment management. Thanks for this post.



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