Target-Date Fund CITs Gaining Momentum, SEI’s CIT Business Benefits from U.S. Retirement Market Trends
SEI, a leading global provider of investment processing, investment management, and investment operations solutions, announced today that its collective investment trust (CIT) business has surpassed $100 billion in assets under administration (AUA) as of Dec. 31, 2020, representing a 20.5% increase in the firm’s AUA from a year ago. Through SEI Trust Company, SEI launched 39 funds across 11 global investment managers, adding over $17.3 billion in CIT assets in 2020.
The growth of SEI’s CIT business is driven by its established turnkey operational platform and experienced, professional staff, enabling investment managers, retirement plans, consultants and advisors an efficient way to gain access to SEI’s extensive CIT line-up. SEI’s growth is further driven by other industry factors, including continued fee pressure and the demand for customized investment solutions for the retirement plan market. Investment managers often work with SEI to establish CIT options pursuing the same strategies as their standard fund offerings. Often these retirement market-focused CITs can be offered at a lower price point than competing products. By doing so, these managers are seeing positive results and meaningful upticks in their retirement businesses.
According to Callan’s “2020 Defined Contribution Trends Survey,” approximately 78% of plan sponsors said last year that CITs are on their investment menus, an 11% increase from 2019. Callan further claims that the number of retirement plans that offer CITs to participants is growing, and in the next few years, that number could surpass that of mutual fund offerings. Nearly 60% of plan sponsors surveyed by Callan said they are likely to move to lower-cost investment vehicles in 2021.
With the growing trend in product customization, CIT target-date funds are poised to become the target-date vehicle of choice among plan sponsors and investment managers alike. Callan’s report cited that target-date strategies offered via CITs have played a big part in the vehicle’s growth. About 40% of all target-date assets, or $800 billion, resided in CITs as of March 2020, according to Morningstar’s “2020 Target-Date Strategy Landscape” report. This was up from less than 20% in 2014.
“Many of our clients are adding target-date fund CITs to their investment portfolios to meet the customization requirements of plan sponsors and consultants,” said John Alshefski, Senior Vice President and Managing Director of SEI’s Investment Manager Services division. “CITs also offer investment managers and plan sponsor investors access to a wide variety of asset classes and multiple fee classes based on their size and relationship.”
Nuveen, the global investment manager of TIAA, has benefited from SEI’s turnkey platform by expanding its target-date fund solution with the addition of the Nuveen TIAA Lifecycle Index CIT series. Nuveen’s CIT series will further complement the firm’s existing TDF suite, which includes an offering of active, passive and blended strategies. Nuveen’s CIT series will now offer a passive target-date strategy in both a mutual fund (TIAA-CREF Lifecycle Index Funds) and a CIT solution. SEI Trust Company is the trustee for Nuveen’s CIT series, providing them with fiduciary and investment management oversight.
“Nuveen is aggressively seeking ways to meet the needs of plan sponsors and participants, and we are doing so by enhancing our target-date fund suite with new strategies and products,” said Jeff Eng, Managing Director and Head of Retirement Products at Nuveen. “With the launch of Nuveen’s Lifecycle Target Date Blend and Index CIT series, and the benefits of utilizing SEI’s platform, our firm continues to grow and evolve in the retirement market,” said Eng.
With over 30 years of expertise servicing CITs, SEI’s turnkey operational platform and its team of dedicated professionals support asset managers’ and plan sponsors’ unique demands. As of Dec. 31, 2020, through SEI Trust Company, SEI services over 450 collective investment funds and 120 collective investment trusts, and works closely with over 135 global asset managers.