In the past several years, increasing attention has come to 401(k) plan fees. As a result of this and new regulations from the Department of Labor concerning plan fees, more companies are offering “collective investment funds” as part of the fund options available in their 401(k) plans, according to an article in the Wall Street Journal. In a study conducted by research and consulting firm Greenwich Associates, the number of large defined-contribution plans that used collective funds last year was up six percent from two years earlier.

According to the Wall Street Journal, collective funds are similar to mutual funds in that they pool investors’ assets and invest in stocks, bonds and other securities. However, because they don’t have to comply with SEC regulations or market to retail customers like mutual funds do, collective funds can often be much cheaper, leading to a larger nest egg for participants. One drawback of collective funds, though, is that there sometimes isn’t as much information on performance and holdings as with retail mutual funds.

NADART began offering both collective investment funds and mutual funds as part of its investment line-up over a decade ago and provides performance information on both. In addition to these funds, we also offer the Roth 401(k) option and Target-dated Funds. If you are interested in learning more about our retirement plan features, please contact a NADART Representative at (800) 462-3278, ext. 7161 or e-mail nadart401k@nada.org.