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Collective Investment Trusts #4533616
10/04/17 08:45 AM
10/04/17 08:45 AM
Joined: Jun 2003
Posts: 10,535
Illinois
javacontour Offline OP
javacontour  Offline OP
Joined: Jun 2003
Posts: 10,535
Illinois
Vangard 401(k) options moving from the standard mutual funds to collective investment trusts as the new option starting in November.
School me on the plusses and minuses.

I think I have some of them.
Plus: lower management fees
Minus: the trustee doesn't have the same SEC oversight relative to a bank or other holding your shares of the underlying mutual fund.
Anything I'm missing?


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Re: Collective Investment Trusts [Re: javacontour] #4533626
10/04/17 08:59 AM
10/04/17 08:59 AM
Joined: Jun 2015
Posts: 4,436
New England
Virtus_Probi Offline
Virtus_Probi  Offline
Joined: Jun 2015
Posts: 4,436
New England
I will ping the wife, she works for a financial planner.


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Re: Collective Investment Trusts [Re: javacontour] #4533721
10/04/17 10:28 AM
10/04/17 10:28 AM
Joined: Dec 2014
Posts: 1,296
California
Vuflanovsky Offline
Vuflanovsky  Offline
Joined: Dec 2014
Posts: 1,296
California
I think you have the basic takeaway as I understand them. CITs aren't new but have been been on deck for the last decade or so and are slowly gaining popularity. One of the knocks on CITs is that being unregulated, they also are unlike regular mutual fund investing in that record keeping and performance reporting aren't the same. I can assume that would differ between plans.

Ten years ago, they were cheaper in relation to regular mutual fund plans. Supposedly that's down to around 5 basis points today because over the last decade, the mutual fund industry introduced changes in share classes and cost and fee cutting measures that took up a lot of the cost differences on average.

Re: Collective Investment Trusts [Re: javacontour] #4533826
10/04/17 12:00 PM
10/04/17 12:00 PM
Joined: Jun 2003
Posts: 10,535
Illinois
javacontour Offline OP
javacontour  Offline OP
Joined: Jun 2003
Posts: 10,535
Illinois
Not that the Fees are all that high to begin with, so I'm not sure I'm saving all that much.



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Re: Collective Investment Trusts [Re: javacontour] #4533833
10/04/17 12:06 PM
10/04/17 12:06 PM
Joined: Sep 2004
Posts: 21,934
Orlando, FL
Mr Nice Offline
Mr Nice  Offline
Joined: Sep 2004
Posts: 21,934
Orlando, FL
Nice low expense ratios.

Re: Collective Investment Trusts [Re: Mr Nice] #4533849
10/04/17 12:17 PM
10/04/17 12:17 PM
Joined: Jun 2003
Posts: 10,535
Illinois
javacontour Offline OP
javacontour  Offline OP
Joined: Jun 2003
Posts: 10,535
Illinois
Originally Posted By: Mr Nice
Nice low expense ratios.


Index funds, not much to manage, so no need for high fees.


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Re: Collective Investment Trusts [Re: javacontour] #4533873
10/04/17 12:31 PM
10/04/17 12:31 PM
Joined: Sep 2004
Posts: 21,934
Orlando, FL
Mr Nice Offline
Mr Nice  Offline
Joined: Sep 2004
Posts: 21,934
Orlando, FL
I've posted before my 401K fees and they are also very similar to what you posted.

Luckily your company has a good 401K plan, some plans are highway robbery and charge crazy high fees.

Re: Collective Investment Trusts [Re: javacontour] #4534051
10/04/17 04:17 PM
10/04/17 04:17 PM
Joined: Jun 2015
Posts: 4,436
New England
Virtus_Probi Offline
Virtus_Probi  Offline
Joined: Jun 2015
Posts: 4,436
New England
Sorry, my wife only had limited knowledge concerning CITs as she hasn't had to deal with them at her work...seems like you got some more useful info from other posters here.


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Re: Collective Investment Trusts [Re: javacontour] #4534182
10/04/17 08:19 PM
10/04/17 08:19 PM
Joined: Apr 2013
Posts: 3,504
Portland, OR
Nate1979 Offline
Nate1979  Offline
Joined: Apr 2013
Posts: 3,504
Portland, OR
Here is the Boglehead wiki on the subject.
https://www.bogleheads.org/wiki/Collective_Investment_Trusts

There are really no downsides. The oversight and applicable laws are just different. Some different reporting requirements and such but as they are mostly used in 401k's this really is a nonissue.


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Re: Collective Investment Trusts [Re: Nate1979] #4534478
10/05/17 09:16 AM
10/05/17 09:16 AM
Joined: Jun 2003
Posts: 10,535
Illinois
javacontour Offline OP
javacontour  Offline OP
Joined: Jun 2003
Posts: 10,535
Illinois
Thanks,

I didn't really think it was a scam. Just wanted to understand what, if any differences it may have made to me.


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Re: Collective Investment Trusts [Re: javacontour] #4534610
10/05/17 12:32 PM
10/05/17 12:32 PM
Joined: Feb 2011
Posts: 1,479
Dacono, CO
Bladecutter Offline
Bladecutter  Offline
Joined: Feb 2011
Posts: 1,479
Dacono, CO
Originally Posted By: javacontour
Not that the Fees are all that high to begin with, so I'm not sure I'm saving all that much.




Yes, I received the same notice yesterday for my company's 401k.
I have shares of both OMMW and OURM (not so upset about this one, honestly), and OMMW is my main fund.
Trying to decide if I should let the change happen, or switch over to a different fund, like DODGX, which has much higher costs, but good returns.

BC.


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