Asset Manager Considerations to Operate CITs Effectively

Defined contribution plans (sponsors and participants) continue to seek investment options that balance cost efficiency, flexibility, and fiduciary alignment. Against that backdrop, collective investment trusts (CITs) have experienced sustained growth and are now a core component of the DC investment landscape.

Once viewed as niche vehicles, CITs are now widely used across single strategy funds, target‑date strategies, white‑label solutions, and increasingly customized plan lineups. Today, CITs account for roughly half of the target‑date market and close to 30% of all defined contribution assets, up markedly from 13% a decade ago. In 2025, total CIT assets surpassed $5 trillion.

For asset managers, this rising adoption represents a meaningful distribution opportunity—particularly as plan sponsors and consultants continue to reassess vehicle choice. At the same time, it introduces a materially different operating and governance model than its most common predecessor and competitor, the traditional open-ended mutual fund.

Unlike mutual funds, CITs sit within multi-pronged and multi-level fiduciary and oversight framework, with a bank‑maintained trust at the top, overseeing accountability, workflows, contractual arrangements and governance expectations across the operating model. As CIT usage continues to scale, servicing and operational readiness can quickly become the gating factor to growth, making it critical for asset managers—whether launching their first CIT or expanding an existing lineup—to understand the servicing capabilities required to support long‑term success.

Core servicing requirements that support scalable CIT programs

While CITs offer meaningful advantages for defined contribution plans, they also introduce a distinct servicing and operating model. Asset managers must be prepared to support this model across governance, accounting, investor servicing, and custody, particularly as programs grow in size and complexity.

Governance and trustee interaction

CITs operate under a bank/trustee‑led governance framework, requiring asset managers to work within defined approval, oversight, and escalation structures that often differ from mutual fund board models. Ongoing interaction with a CIT trustee (both third party and captive flavors) typically includes oversight of governing documents and contracts, investment guidelines, fee arrangements and disclosures, and any material changes to strategy execution, personnel, or other aspects of service provider and sub‑adviser relationships. Sitting behind that process is an efficient back office, with the right market connectivity and capabilities to ensure a smooth operation once a fund is up and running. Let’s take a quick walk through that operation.

Fund accounting and administration

Daily valuation sits at the core of most CIT funds, particularly those used in defined contribution plans and target‑date structures. Supportive accounting processes, therefore, must accommodate daily market requirements around timing and delivery to intermediaries and investors.

As CIT complexes expand, operational complexity can often follow. That complexity and volume demands a scalable and resilient valuation, recon, control, and exception management framework to ensure consistent and accurate output and reporting.

Investor servicing, intermediaries, and recordkeeper connectivity

Investor servicing for CITs resembles a highly intermediated institutional investor model and differs meaningfully from its retail cousin. Plan‑level onboarding is required, and investor records are typically maintained at the plan or intermediary level, but crucially must inform recordkeeper data needs to source and support plan participant level reporting. As a result, seamless connectivity with recordkeepers and intermediaries—including NSCC/Fund/SERV—is critical to supporting subscriptions, redemptions, and ongoing servicing.

Processing flows must support daily transactions while aligning with each recordkeeper’s operational standards and cut‑off requirements. At the same time, participant‑level transparency expectations continue to rise, placing additional demands on data, reporting, and operational coordination. Effective servicing models must bridge institutional trust mechanics with the participant experience expected in modern DC plans.

Custody and asset servicing

Custody remains central to CIT operations, encompassing safekeeping, settlement, income collection, and corporate actions processing. For strategies with global exposure, asset managers must also ensure access to foreign exchange capabilities and non‑U.S. market support.

Equally important is data alignment across custody, accounting, and reporting functions. Consistent, timely data helps reduce operational friction and supports accurate information delivery to trustees, asset managers plan sponsors, and intermediaries. Integrated asset servicing models can further reduce handoffs, improve control, and support scalability as CIT programs expand.

Supporting more complex CIT use cases

As asset managers gain experience with CIT structures, programs often evolve beyond single‑strategy offerings into more complex use cases. Fund‑of‑fund and multi‑manager CITs introduce additional layers of valuation, rebalancing, and oversight.

Target‑date fund applications, in particular, place heightened demands on daily rebalancing, cash management, and operational automation. As these structures grow, trade volumes and data dependencies tend to increase nonlinearly, making automation and straight‑through processing increasingly important. This dynamic underscores the value of servicing models designed with scale and complexity in mind from the outset.

What asset managers should look for in a CIT servicing partner

With servicing demands increasing alongside CIT adoption and structural complexity, selecting the right servicing partner becomes a strategic consideration. Asset managers should evaluate potential partners through the lens of operating readiness, governance support, and long‑term scalability. Key characteristics often include:

· Experience operating across both proprietary and third‑party trustee models, with a deep understanding of trustee expectations and governance dynamics

· Proven ability to support daily valuation, dealing, and reporting at scale, particularly for DC‑oriented strategies

· Breadth of capabilities across accounting, custody, transfer agency, and intermediary connectivity, delivered through an integrated servicing approach

· Demonstrated operational experience with target‑date, fund‑of‑fund, and multi‑manager CIT structures

· Infrastructure designed to support audits, regulatory examinations, and program growth without introducing incremental operational risk

Northern Trust’s experience supporting asset managers in CIT programs

Northern Trust has longstanding experience servicing CIT structures across both proprietary and third‑party trustee models. We support a range of CIT funds, working closely with asset managers and trustees across diverse strategies.

Our integrated servicing capabilities span fund accounting and administration, custody, and investor servicing, helping reduce fragmentation across the operating model. Our operating framework contemplates support of complex target‑date and multi‑manager CIT complexes, and Northern Trust works alongside those same parties as CIT offerings evolve—helping align investment ambition with operational execution. See our other article, Are We Entering a Golden Age for Collective Investment Trusts?, for an assessment of the broader CIT market evolution.

Aligning investment ambition with operating readiness

CITs offer asset managers a powerful way to meet evolving retirement market demand and deepen relationships within the defined contribution ecosystem. However, as programs scale, servicing quality and operating design become strategic differentiators rather than back‑office considerations. Asset managers that pair strong investment capabilities with experienced, governance‑ready servicing partners are better positioned to grow CIT offerings sustainably over the long term.

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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