Are We Entering a Golden Age for Collective Investment Trusts?

Considerations for asset managers thinking about retirement plan distribution

When it comes to fund vehicle choice for retirement plan investment lineups—and the asset managers delivering their underlying investment strategies—collective investment trusts (CITs) are increasingly at the center of these conversations.

Growth in the CIT market has been steady and impressive, largely thanks to the simultaneous growth of target date funds, which are used by 68% of 401(k) participants. CITs have become the leading vehicle for this popular 401(k) structure, accounting for 54% of all U.S. target-date fund assets, compared to 46% for mutual funds. Alongside the surge in reliance on target date funds, CIT growth appears poised to grow further, fueled by a convergence of legislative and regulatory developments and market demand. Long viewed primarily as a cost‑efficient and flexible alternative to mutual funds, CITs are increasingly evolving into platforms for innovation—supporting new investment strategies, structures, and governance models. As a result, opportunities are emerging for traditional and alternative asset managers alike seeking further access to defined contribution plan assets.

Two primary developments are fueling more attention for CITs: pending legislation that would permit 403(b) plans to invest in CITs, and newly issued Department of Labor guidance that re-establishes how plan fiduciaries can prudently incorporate alternative assets into plan lineups. While questions remain around ultimate plan adoption, litigation risk, and operational implementation, the regulatory framework, as laid out in the proposed rule, is now more explicit than at any point to date.

While hurdles remain for both developments to be fully realized, the direction of travel is becoming clearer. Taken together, these forces further evidence the shift in how CITs will be perceived—from simply a legal wrapper choice to an enabling mechanism for what comes next in retirement investing. Below, we dive[RB1] deeper into the potential impact of each of these developments.

Retirement plans' growing access to alternatives

In March 2026, the U.S. Department of Labor (DOL) issued a proposed rule, building on a White House order from last Summer encouraging the expansion of retirement plan access to private or alternative assets strategies. The rules outline how plan fiduciaries can prudently evaluate any potential plan lineup investment—including “alternatives”, such as private equity, private credit, real assets, and other less‑liquid strategies—by prudently assessing six factors: performance, fees, liquidity, risk, diversification and valuation. While the proposal does not mandate inclusion of private assets, it creates an overall framework to evaluate any potential plan lineup strategy, and in so doing, provide a safe harbor from legal action around the selection and monitoring process of those strategies under ERISA. While not viewed as perfect by the industry, and subject to a comment period through May, the proposal represents the next step toward more explicit comfort around alternatives exposure for defined contribution plans under ERISA, and thereby indirectly fostering the utilization of CITs.

Compared with registered mutual funds, CITs offer fewer structural and diversification constraints and an overall greater flexibility around liquidity, asset types, and exposure design. These characteristics make them a more practical structure for strategies such as private credit, real estate, and other less‑liquid or semi‑liquid assets. Importantly, flexibility does not mean a lack of regulation; CITs operate within established fiduciary and governance framework. With the DOL’s proposed rule now delineating how fiduciaries can evaluate all strategies in defined contribution plans, broader inclusion of alternatives is moving from an uncertain, and sporadically utilized, possibility to a more actionable pathway. While implementation details and operational questions remain, CITs are increasingly positioned as the favored structure for delivering private market exposures within defined contribution (DC)[RB1] plans.

Expansion of CIT eligibility in the 403(b) market

Proposed legislation, clarifying SECURE 2.0, would allow 403(b) plans to invest in CITs, removing a long‑standing structural prohibition. While the measure has passed the U.S. House of Representatives, the outcome in the Senate remains pending. Even without final resolution, the proposal has already influenced industry planning and discussion.

The 403(b) market represents a large and historically distinct segment of the retirement landscape. Expanded access to CITs would increase the addressable market, reduce inconsistencies between retirement plan types, and enable greater standardization across investment and operational approaches. In advance of legislative resolution, sponsors and providers are already evaluating governance, education, and implementation considerations.

Asset managers are assessing how CITs could fit alongside existing funds and strategies, the governance and fiduciary frameworks needed to support adoption, and their operational readiness should reliance on CIT vehicles increase.

Northern Trust perspective: experience that matters in a changing CIT market

With all this growth and even more potentially on the horizon, CITs have become a distinct distribution channel, not just a vehicle. If 403(b) access expands and private markets enter 401(k) plans through CIT‑based structures, the path to capitalizing on this opportunity increasingly favors managers with CIT‑ready lineups and strong partner ecosystems.

Private market exposure in DC plans will likely be delivered as packaged solutions, often within CIT‑based target‑date or multi‑asset structures. In that environment, trustee and administrator relationships, custody and valuation capabilities, and recordkeeper integrations can determine speed to market and long‑term viability.

Northern Trust has supported CIT programs across a wide range of strategies and plan types for decades. As CITs traditionally support more complex investment approaches, experience in governance, operational resilience, and servicing discipline becomes increasingly important. Northern Trust views this period as one of stewardship, focused on helping clients navigate an evolving market with confidence.

A market evolving before it fully settles

Key developments shaping the future of CITs—403(b) eligibility and newly proposed fiduciary guidance for private assets in 401(k) plans—have become directionally clearer, even as implementation details continue to evolve. This moment represents a defining phase for asset managers currently offering CITs or considering entry into the market. As retirement investing evolves incrementally, CITs are increasingly at its core.

Meet Your Expert

Ryan Dargis

Ryan Dargis leads Service & Strategy Enablement for unregistered funds for Global Fund Services (GFS) in the Americas at Northern Trust, focusing on fund market surveillance, tracking trends and initiatives that enhance that impact client offerings and distribution experience. He partners across teams to align strategy with execution, driving operational efficiency and scalable solutions that support evolving these client and market needs.

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