I have analyzed the default company 401(k) retirement plan menu for dozens of Minnesota companies. There is not much clear information available to individual company 401(k) retirement plan participants on their collective trust mutual fund menu options.
Collective trust mutual funds can be found in a company retirement plan like a 401(k), 403(b) or 457(b). The objective behind a collective trust mutual fund is to offer a mutual fund like investment option at a lower annual cost.
Collective trust mutual funds often include broad large cap, mid cap or small cap stock market mutual funds. Collective trust mutual funds are managed by high-profile mutual fund companies. Some of the collective trust mutual funds are clones of publicly traded mutual funds.
Price and performance information for collective trust mutual funds can’t be found on major financial websites like Marketwatch or Morningstar.com. There are no ticker symbols to follow every day. End of the month and end of the quarter investment performance information is hard to find on collective trust mutual funds.
Don’t blindly trust that your company 401(k) retirement plan menu includes a good collective trust mutual fund option. There are constant homework, cost comparison and monitoring requirements
Compare the investment performance and annual costs of every company 401(k) retirement plan mutual fund option that you own. Next, make the same comparison with the other company 401(k) retirement plan menu options available to you.
A good collective trust mutual fund 401(k) retirement plan option could be a great alternative to a higher-cost and worse performing mutual fund. Or it may not. The only way to make that decision is to analyze the numbers.
Ric Lager
Lager & Company, Inc.
