Most people saving for retirement have never heard of collective investment trusts (CITs), even if they hold them in their employer-sponsored plans. This savings tool can offer many advantages over mutual funds that your employer might offer at your company. 401(k)with reduced fees, increased tax efficiency and flexibility. But it also carries risks. Given the popularity of CITs, they hold almost a third of the assets in defined contribution plans, worth about $7 trillion – you should reexamine your retirement plan.

A CIT is an investment vehicle that pools investors’ funds to purchase a portfolio of investments, much like a mutual fund, but with some important differences. CITs are not traded on an exchange and are administered by banks or trust companies. They can even hold the same companies as a mutual fund, but CITs are almost always cheaper because they have less stringent regulatory and marketing requirements.