Firms Launch Collective Trusts for DC Clients

February 21, 2013 ( Clear Sailing Investment Group (CSIG) and Hand Benefits & Trust, a BPAS Company, launched collective trust funds for Clear Sailing’s retirement plan clients.

The underlying investment options in the CSIG risk-based series of funds include low-cost institutional mutual funds and collective trust funds with minimum investment thresholds; alternative investments; mutual funds with trading restrictions; and certain mutual funds that may be closed to new investors. Prior to November, CSIG was offering risk-based models for its defined contribution (DC plan clients), including plans administered by BPAS and other select recordkeeping firms.    

Most of the same asset class managers are utilized as before the conversion, but in an institutional share class or collective fund for maximum cost efficiency. Also, exchange-traded funds (ETFs) and other securities can be used within the collective funds that would not be appropriate as individual investment options within the plan.   

The companies explained that while model portfolios are attractive from a participant perspective, they involve a considerable amount of additional administrative and operational work at the level of each plan, not to mention problems caused by fund closures, investment minimums, redemption fees and other matters. What’s more, new Department of Labor (DOL) disclosure regulations have caused retirement advisers to evaluate model portfolios from a disclosure and compliance standpoint. 

“Collective trust funds allow an investment group, like CSIG, to advise a single series of risk-based portfolios on behalf of all retirement plan clients, across multiple recordkeeping platforms.Efficient portfolio trading, lower underlying fund costs, compliance with disclosure regulations, audited financial statements and scale are features and benefits of these vehicles.  Daniel and his team calculated historical model returns, which we incorporated into the participant communications along with detailed disclosures on the how the returns were calculated.This provides retirement plan participants with additional investment performance information, said David Hand, CEO of Hand Benefits & Trust.  

For more information on the administration of collective investment funds, please call Marty Campbell at 713-744-3818. For more information on retirement plan administration services offered by BPAS, please call Paul Neveu at 315-292-6968.