ICMA-RC Announces Fund Restructuring
May 9, 2016
ICMA-RC announces the restructuring of its proprietary investment options to a collective investment trust ("CIT")-only structure. To accomplish this, the registered Vantagepoint Funds will be liquidated and assets invested in those funds will be transferred to collective investment trust funds ("CITs"). Like registered mutual funds, CITs combine the assets of multiple investors into a single fund with a specific investment strategy. The change will occur during the fourth quarter of 2016.
The change to a CIT-only structure is meant to increase value to ICMA-RC plan sponsors and participants through a simplified investment structure, improved flexibility, and more cost-efficient investment options. The savings that are expected to result from the changes are meant to lower investor costs. The new CITs will hold the same investments, adhere to the same investment objectives, and use the same investment strategy as the registered Vantagepoint Funds.
CITs are widely accepted as retirement plan investments and are increasingly replacing registered mutual funds. They have traditionally only been available to large retirement plans, but technological advances and industry enhancements in fund design now often make CITs more advantageous and attractive investment options for retirement plans of all sizes. Many CITs trade the same way as mutual funds and are often ranked by Morningstar®.
The vast majority of participants in ICMA-RC administered 401 or 457 plans already invest in CITs - the VantageTrust Funds - so changing to the more cost-efficient CIT-only structure for participants in 401 and 457 plans will be seamless. These participants (and their plan sponsors) do not need to take any action.
A relatively small group of affected clients, which includes individual Vantagepoint IRA investors, VantageCare Retiree Health Savings ("RHS") plans, and Employer Investment Programs ("EIP"), who need to take action, will be notified directly well in advance of the restructuring. Until then, no action is required. ICMA-RC will keep participants and their employers updated regarding the conversion with open and frequent communications.
ICMA-RC is committed to our mission of helping public sector employees build retirement security by providing a wide variety of quality investment options. This restructuring is one of the ways we continue to fulfill our mission; the benefits of which will ultimately be realized by our state and local government plan sponsors and participants.