Attracted to the low costs of collective trusts, as well as the ability for investors to trade them daily at a time when many mutual funds are imposing short-term trading restrictions, 401(k) plans are increasingly turning to these alternatives, according to a white paper from AST Capital Trust Co.

Collective trusts can charge lower fees than mutual funds since they are expressly designed for 401(k) plans and do not have to meet the costs of servicing retail clients. In addition to these lower costs, plan sponsors like collective trusts because they permit investors to trade them daily, whereas most mutual funds have imposed short-term trading restrictions and redemption fees in response to Rule 22c-2.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.