Collective Trust Funds

The Collective Trust Funds have been around since 1927 and at this time, they were already an esteemed investment, inside the retirement plan society. CTFs are investments which provide various positive benefits since they are not subject to tax, and they are a mutual investment that is composed of assets of stock bonuses, retirement assets and trusts that are not subject to income tax.

The story wasn’t however so plain sailing since in the 1980s, the retirement plan sector began to change. CTFs have been used as investment vehicles in the first 401k plans. When the new plans came around in the 1980’s these began investing in mutual funds, since the latter offered expedient answers and also features that were more appealing for retirement plans.

Until the late 1990s mutual funds were doing much better than CTFs, and the majority of CTFs stayed in the defined contribution market, which was made up of funds that offered stable values and slow moving indexes.

CTFs have however made a comeback a few years ago; when in 2003 the market began again to change. The recovery occurred when plan sponsors began looking for funds that carried a lower fee. The flexible qualities of CTFs also helped in their revival.

Lately CTFs are also being used in retirement plans that can be defined as less traditional. The CTFs expansion possibilities are more promising that those for mutual funds, within the market for retirement plans. As we move along, more and more investment management firms are looking at CTFs, and re including them in their portfolios.

Reference: http://www.401khelpcenter.com/401k/ctf_overview.html