Certified Plan Sponsor Professional (CPSP) Practice Exam

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Which investment funds are exclusively available through employer-sponsored retirement plans?

Index funds
Collective Investment Trusts
Exchange traded funds
Mutual funds

The correct answer is: Collective Investment Trusts

Collective Investment Trusts (CITs) are investment funds that are specifically designed for use within qualified retirement plans, such as 401(k) plans. They are not available to individual investors outside of these employer-sponsored plans. CITs provide a way for multiple investors to pool their money in a trust structure, which allows for potentially lower fees and better pricing, as well as a simplified regulatory environment compared to mutual funds. CITs operate under a different regulatory framework than mutual funds, which allows them to be less expensive and more flexible, making them an attractive option for plan sponsors who are seeking to provide their participants with cost-effective investment choices within their retirement plans. This exclusivity to employer-sponsored plans highlights their role in retirement planning and asset growth for employees. In contrast, index funds, exchange-traded funds (ETFs), and mutual funds can be available to both individual investors and institutional clients, as they are typically bought and sold on public exchanges or through brokerage accounts. These fund types have a broader accessibility, thus setting them apart from CITs.